Can a prospective purchaser of Dog Haus rely on the franchisee's written statement?
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.
To constitute a bona fide written offer, the Third Party Offer must also apply to purchase or otherwise acquire all Dog Haus Restaurants then owned and operated by Franchisee, or its Affiliates.
14.3.1 Franchisee, or the Proposed Buyer, shall attach to its application for consent to complete the transfer a copy of the Third Party Offer together with (i) information relating to the proposed transferee's experience and qualifications; (ii) a copy of the proposed transferee's current financial statement; and (iii) any other information material to the Third Party Offer, proposed transferee and proposed Assignment or that Franchisor requests.
14.3.2 Franchisor or its nominee shall have the right, exercisable by written notice ("Purchase Notice") given to Franchisee or the Proposed Buyer, within thirty (30) days following receipt of the Third Party Offer, all supporting information, and the application for consent, to notify Franchisee or the Proposed Buyer that it will purchase or acquire the rights, assets, Equity or interests proposed to be assigned on the same terms and conditions set forth in the Third Party Offer, except that Franchisor may (i) substitute cash for any form of payment proposed in the offer discounted to present value based upon the rate of interest stated in the Third Party Offer; and (ii) deduct from the purchase price the amount of all amounts then due and owing from Franchisee to Franchisor under this Agreement or otherwise.
Source: Item 22 — CONTRACTS (FDD page 87)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, if a Dog Haus franchisee intends to sell their business, they must first seek approval from Dog Haus. As part of this process, if the franchisee receives a legitimate written offer from a potential buyer, they are obligated to submit this offer to Dog Haus for their consideration.
The franchisee is required to provide Dog Haus with a copy of the offer, along with detailed information about the prospective buyer's background, qualifications, and current financial status. This comprehensive submission ensures that Dog Haus has all the necessary information to make an informed decision regarding the proposed transfer.
Dog Haus retains the right of first refusal, allowing them to purchase the franchise on the same terms and conditions as the third-party offer. This provision enables Dog Haus to maintain control over its brand and ensure that any new franchisee meets their standards. However, Dog Haus can substitute cash for any proposed payment method, discounting it to present value based on the interest rate in the Third Party Offer, and deduct any outstanding amounts owed by the franchisee.