Under the Dog Haus franchise agreement, can the Franchisor unreasonably withhold consent?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
Unless otherwise expressly provided in this Agreement to the contrary, any consent, approval, acceptance or authorization of Franchisor or Franchisee that may be required under this Agreement shall be in writing and shall not be unreasonably withheld, conditioned or delayed by the Party whose consent, approval, acceptance or authorization has been requested.
Further, without Franchisor's prior written consent, which may be withheld by Franchisor in its discretion, (i) Franchisee shall not offer for sale or transfer at public or private auction any of the rights of Franchisee under this Agreement; and (ii) Franchisee shall not, directly or indirectly, pledge, encumber, hypothecate or otherwise grant any third party a security interest in this Agreement in any manner whatsoever.
In no event shall either Party make or have any claim for money damages based on any claim or assertion that the other Party has unreasonably withheld, conditioned or delayed any consent, approval or authorization required under this Agreement.
Each Party's sole remedy for such a claim shall be an action or proceeding to enforce the provisions of this Agreement, for specific performance or for declaratory judgment.
Source: Item 22 — CONTRACTS (FDD page 87)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, the franchise agreement states that unless expressly provided to the contrary, any consent, approval, acceptance, or authorization required from Dog Haus or the franchisee shall be in writing and shall not be unreasonably withheld, conditioned, or delayed by the party whose consent, approval, acceptance, or authorization has been requested. This clause aims to ensure fairness and prevent either party from obstructing necessary actions without a legitimate reason.
However, there are exceptions where Dog Haus may withhold consent at its discretion. Specifically, the franchisee cannot offer for sale or transfer any rights under the agreement at a public or private auction, nor can they pledge, encumber, or grant any third party a security interest in the agreement without Dog Haus's prior written consent, which Dog Haus may withhold at its discretion. This protects Dog Haus's interests by maintaining control over who becomes involved with the franchise and how its assets are leveraged.
Furthermore, the agreement outlines that in no event shall either party make or have any claim for money damages based on any claim or assertion that the other party has unreasonably withheld, conditioned, or delayed any consent, approval, or authorization required under the agreement. Instead, each party's sole remedy for such a claim shall be an action or proceeding to enforce the provisions of the agreement, for specific performance, or for declaratory judgment. This means that if a franchisee believes Dog Haus has unreasonably withheld consent, they cannot sue for monetary damages but can seek a court order to enforce the agreement or clarify their rights.
This arrangement is fairly typical in franchising, balancing the franchisor's need to protect their brand and system with the franchisee's need for reasonable operational flexibility. Prospective franchisees should carefully consider these provisions and seek legal counsel to fully understand their rights and obligations under the Dog Haus franchise agreement.