Does state law affect the termination provisions of the Dog Haus Area Development Agreement?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section In Area Development Agreement (Exhibit B) | Summary |
|---|---|---|
| n. Franchisor's right of first | Section 9.3 | We may match any offer to purchase your business. |
| refusal to acquire Area | ||
| Developer's business | ||
| o. Franchisor's option to purchase Area Developer's business | 9.1 | We may sell our assets, the Dog Haus Marks or the Dog Haus System, may sell securities in a public offering or in a private placement, may merge, acquire other corporations, or be acquired by another corporation, and may undertake a refinancing, recapitalization, leveraged buy-out, or other economic or financial restructuring (each a "Capital Event") all without your consent or approval by you. Upon the occurrence of a Capital Event, we have the right to compel you to sell to us the assets of all your Dog Haus Restaurants, whether or not they are open or under construction. |
| p. Death or disability of Area Developer | Section 9.5 | Your spouse, heirs or personal representative has 180 days to purchase your interest or complete an assignment of your interest to a qualified, approved third party, subject to the transfer provisions. |
| q. Non-competition covenants during the term of the franchise | Section 13.2 | You are prohibited from: (i) diverting any present or prospective Dog Haus customer to any competitor, or performing any other act injurious or prejudicial to the goodwill associated with the Dog Haus Marks and the Dog Haus System; or (ii) owning or having any interest in a "Competitive Business" with Dog Haus Restaurants. A "Competitive Business" is defined as any restaurant business that prepares, offers and sells gourmet hot dogs, sausages, hamburgers, chicken, plant-based food products or any combination of these products as primary menu items and any business that looks like, copies, imitates, or operates with similar trade dress or décor to Dog Haus Restaurants. (subject to state law) |
| r. Non-competition covenants after the franchise is terminated or expires | Section 13.3 | For 2 years following the expiration or termination of your Area Development Agreement, you cannot own or have any interest in a competitive business within 2 miles of any location designated as a "Franchised Location" in a Franchise Agreement between you and us, or at any location within a 2 mile radius of any Dog Haus Restaurant or a Franchised Location. (subject to state law) |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 63–72)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, state law can affect certain provisions within the Area Development Agreement, specifically regarding non-competition covenants. The agreement states that the non-competition covenants both during and after the term of the franchise are subject to state law.
During the term of the Area Development Agreement, franchisees are prohibited from diverting customers to competitors or owning any interest in a competitive business with Dog Haus Restaurants. A competitive business is defined as any restaurant that prepares and sells gourmet hot dogs, sausages, hamburgers, chicken, plant-based food products, or any combination of these as primary menu items, or any business that imitates Dog Haus Restaurants.
After the Area Development Agreement expires or is terminated, franchisees are restricted for two years from owning any interest in a competitive business within 2 miles of any designated Franchised Location or any Dog Haus Restaurant. Because these non-compete clauses are explicitly "subject to state law," the specific enforceability and scope of these provisions may vary depending on the franchisee's location. Prospective franchisees should consult with a legal professional to understand how local state laws may impact these covenants.