If a Dog Haus franchisee admits they are unable to pay their debts, what is the consequence?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
iolation of any of the Anti-Terrorism Laws. Any violation of the Anti-Terrorism Laws by Franchisee or Franchisee's employees or any "blocking" of Franchisee's assets under the Anti-Terrorism Laws constitute grounds for immediate termination of this Agreement and any other agreements Franchisee has entered into with Franchisor or any of its Affiliates, in accordance with the provisions of Section 16.2.
- 15.11 Survival. The provisions of this Article 15 shall survive the expiration and termination of this Agreement and shall not limit, restrain or otherwise affect any right or cause of action which may accrue to Franchisor for any infringement of, violation of, or interference with, this Agreement, or the Dog Haus Marks, the Dog Haus System, the Dog Haus Confidential Information, the Dog Haus Trade Secrets, or any other proprietary aspects of Franchisor's business.
16. DEFAULT AND TERMINATION.
16.1 Termination In the Event of Franchisee's Bankruptcy or Insolvency. Franchisee shall be deemed to be in Default under this Agreement, and all rights granted to Franchisee of this Agreement shall automatically terminate without notice to Franchisee, (i) if Franchisee or its Principal Owner becomes insolvent or make a general assignment for the benefit of creditors; (ii) if a petition in bankruptcy is filed under any foreign, state or United States Bankruptcy Act by Franchisee or its Principal Owner or if a petition is filed against and not o
Source: Item 22 — CONTRACTS (FDD page 87)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, if a franchisee admits they are unable to pay their debts, it constitutes an event of default under the franchise agreement. Specifically, if a franchisee admits they are unable to pay their debts, all rights granted to the franchisee under the agreement automatically terminate without notice.
This default and termination can occur if the franchisee becomes insolvent, makes an assignment for the benefit of creditors, or faces a bankruptcy petition that they do not oppose. It also applies if a receiver is appointed for the franchise's assets with the franchisee's consent, or if proceedings for a composition with creditors are instituted against them. A final judgment exceeding $100,000 against the franchised restaurant that remains unsatisfied for 30 days or longer (unless a supersedeas bond is filed) also triggers default and termination.
This clause highlights the critical importance of maintaining financial solvency as a Dog Haus franchisee. Admitting inability to pay debts triggers immediate termination, underscoring the need for careful financial management and planning. Prospective franchisees should fully understand these financial obligations and ensure they have sufficient capital and resources to meet them to avoid losing their franchise rights.