Are there any exceptions to the Dog Haus non-compete covenants for ownership of equity securities?

According to Dog Haus's 2025 Franchise Disclosure Document, there is an exception to the non-compete covenants regarding ownership of equity securities. Specifically, the non-compete restrictions outlined in Sections 13.2 and 13.3 of the agreement do not apply if the Area Developer or an Owner holds less than a five percent (5%) beneficial interest in the outstanding equity securities of a Competitive Business.

This exception is conditional on the Competitive Business being registered under the Securities Act of 1833 or the Securities Exchange Act of 1834. This means that if a Dog Haus franchisee or owner has a small investment in a publicly traded competitor, it will not violate the non-compete agreement, provided their ownership stake is below the 5% threshold and the competitor is a registered entity under the specified securities regulations.

This provision provides some flexibility for Dog Haus franchisees and owners to diversify their investments without automatically breaching their franchise agreement. However, it is crucial for franchisees to ensure their investments comply strictly with these conditions to avoid potential conflicts with the non-compete obligations. It is also important to note that this exception only applies to ownership of equity securities and does not permit active involvement or rendering services to a Competitive Business beyond passive investment.