If a Dog Haus franchisee is in bankruptcy and contemplating an assignment of the franchise agreement, how soon must the franchisor be notified of the proposed assignment?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
Any attempted or purported Assignment which fails to comply with the requirements of this Article 14 shall be null and void and shall constitute a Default under this Agreement.
- 14.3. Right of First Refusal.
Except with respect to a Qualified Assignment, if Franchisee or an Owner receive a bona fide written offer ("Third Party Offer") from a third party (the "Proposed Buyer") to purchase or otherwise acquire any interest in Franchisee which will result in an Assignment within the meaning of this Agreement, Franchisee or the Proposed Buyer shall, within fourteen (14) days after receiving the Third Party Offer and before accepting it, apply to Franchisor in writing for Franchisor's consent to the proposed Assignment.
Source: Item 22 — CONTRACTS (FDD page 87)
What This Means (2025 FDD)
The 2025 Dog Haus Franchise Disclosure Document does not specify a timeframe in which a franchisee in bankruptcy must notify the franchisor of a proposed assignment of the franchise agreement. However, the FDD does state that any attempted assignment that fails to comply with the requirements outlined in Article 14 of the franchise agreement will be considered a default.
To initiate an assignment, the franchisee or proposed buyer must apply to Dog Haus in writing for consent to the proposed assignment within fourteen days of receiving a bona fide written offer from a third party. This application must include a copy of the third-party offer, information about the proposed transferee's experience and qualifications, the proposed transferee's current financial statement, and any other relevant information requested by Dog Haus.
Given the lack of specific guidance regarding notification timelines for bankrupt franchisees, it is crucial for prospective franchisees to seek clarification from Dog Haus regarding the exact procedures and deadlines applicable in such situations. Understanding these requirements is essential for maintaining compliance with the franchise agreement and avoiding potential defaults.