Under what circumstances does Dog Haus have the option to purchase the assets of the Franchised Restaurant?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
16.2.6 If Franchisee's operation of the Franchised Restaurant constitutes an imminent danger to the public health.
16.2.7 If an audit or investigation conducted by Franchisor discloses that Franchisee has knowingly maintained false books or records, or submitted false reports to Franchisor, or knowingly understated its Gross Sales or withheld the reporting of the same as provided in this Agreement.
16.2.8 If Franchisee or any of its Owners, are convicted of or plead guilty or nolo contendere to a felony or any other crime or offense that is reasonably likely, in the sole opinion of Franchisor, to adversely affect Franchisor's reputation, the Dog Haus System, the Dog Haus Marks or the goodwill associated with the same; however, if the crime or offense is committed by an Owner other than the Principal Owner, Franchisor may only terminate this Agreement under this Section 16.2.8 if the convicted Owner fails to sell its interest in Franchisee to Franchisee's other Owners within thirty (30) days after the conviction or guilty plea.
16.2.9 If Franchisee materially misuses or makes any unauthorized use of the Dog Haus Marks or otherwise materially impairs the goodwill associated therewith or Franchisor's rights therein, or takes any action which reflects materially and unfavorably upon the operation and reputation of the Franchised Restaurant or the Dog Haus chain generally.
16.2.10 If Franchisee makes any unauthorized use, disclosure, or duplication of the Dog Haus Trade Secrets or Dog Haus Confidential Information.
16.2.11 If Franchisee fails to purchase and maintain in inventory the types and quantities of Dog Haus Branded Products, Dog Haus Proprietary Products, Sub-Branded Products or Non-Proprietary Products and Services necessary to meet reasonably anticipated consumer demand.
16.2.12 If Franchisee shall or purports to purchase Dog Haus Branded Products or Dog Haus Proprietary Products or Sub-Branded Products or Non-Proprietary Products and Services from other than a Dog Haus Approved Supplier and fails to cease use of the non-complying product within three (3) days after having received notification from Franchisor to do so.
Source: Item 22 — CONTRACTS (FDD page 87)
What This Means (2025 FDD)
Based on the 2025 Dog Haus Franchise Disclosure Document, Dog Haus may have the option to purchase the assets of a franchised restaurant under specific circumstances detailed in Section 16.2 of the franchise agreement. These circumstances include situations where the franchisee's operation poses an imminent danger to public health, or if an audit reveals the franchisee knowingly maintained false records, submitted false reports, understated gross sales, or withheld sales reporting.
Additionally, Dog Haus may exercise this option if the franchisee or any of its owners are convicted of a felony or any crime that could negatively impact Dog Haus's reputation, brand, or goodwill. However, if an owner other than the principal owner commits the offense, the franchisee has 30 days for the convicted owner to sell their interest to the other owners. Other conditions that could trigger the asset purchase option include the franchisee's misuse of Dog Haus's trademarks, unauthorized use or disclosure of trade secrets or confidential information, failure to maintain required inventory levels of branded products, or purchasing products from unapproved suppliers without rectifying the issue within three days of notification from Dog Haus.
These stipulations in the franchise agreement are important for prospective franchisees to understand, as they outline the conditions under which Dog Haus can intervene and potentially take over the operation of the restaurant. Franchisees must adhere to operational standards, maintain accurate records, and protect the brand's integrity to avoid triggering these clauses. Understanding these conditions is crucial for maintaining a successful and compliant Dog Haus franchise.