What must Hydrodog approve regarding the transfer of a Hydrodog franchise?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
nowledge that we can sell our assets; sell securities in a public offering or in a private placement; merge with, acquire, or be acquired by another company; or undertake a refinancing, recapitalization, leveraged buy-out, or other economic or financial restructuring, without restriction and without affecting your obligations under this Agreement.
- 15.2 By You. You understand and acknowledge that the rights and duties created by this Agreement are personal to you (or, if you are a Business Entity, to your owners) and that we have granted the Franchise to you in reliance upon our perceptions of your (or your owners') individual or collective character, skill, aptitude, attitude, business ability and financial capacity. Accordingly, neither this Agreement (or any interest in it) nor any ownership or other interest that would reduce your voting or equity interest to less than 51% in you or your HydroDog Business may be transferred without our prior written approval. Any transfer without such approval constitutes a breach of this Agreement and is void and of no effect. As used in this Agreement, the term "transfer" includes your (or your owners') voluntary,
involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in: (a) this Agreement; (b) you; or (c) your HydroDog Business.
An assignment, sale, gift or other disposition includes the following events:
- (a) transfer of ownership of capital stock or a partnership interest;
- (b) merger or consolidation or issuance of additional securities or interests representing an ownership interest in you;
- (c) any issuance or sale of your stock or any security convertible to your stock;
- (d) transfer of an interest in you, this Agreement or your HydroDog Business in a divorce, insolvency or corporate or partnership dissolution proceeding or otherwise by operation of law;
- (e) transfer of an interest in you, this Agreement or your HydroDog Business, in the event of your death or the death of one of your owners, by will, declaration of or transfer in trust or under the laws of intestate succession; or
- (f) pledge of this Agreement (to someone other than us) or of an ownership interest in you as security, foreclosure upon your HydroDog Business or your transfer, surrender or loss of possession, control or management of your HydroDog Business.
- 15.3 Conditions for Approval of Transfer. If you (and your owners) are in full compliance with this Agreement, then subject to the other provisions of this Section, we will approve a transfer that meets all the applicable requirements of this Section. The proposed transferee and its direct and indirect owners must be individuals of good character and otherwise meet our then applicable standards for the HydroDog Business franchisees.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, Hydrodog must approve several aspects of a franchise transfer. Hydrodog retains the right to transfer the agreement to another entity without the franchisee's consent. However, the franchisee's ability to transfer the franchise is restricted, requiring Hydrodog's prior written approval for any transfer that reduces the franchisee's voting or equity interest to less than 51%. Any transfer conducted without this approval is considered a breach of the agreement and is void.
The term "transfer" is broadly defined to include voluntary, involuntary, direct, or indirect assignments, sales, gifts, or other dispositions of interest in the franchise agreement, the franchisee, or the Hydrodog business. Specific events that constitute a transfer include changes in ownership of capital stock or partnership interests, mergers or consolidations, issuance of additional securities, and any sale of stock or securities convertible to stock.
Hydrodog must also approve the material terms and conditions of the transfer, ensuring that the price and payment terms do not negatively impact the transferee's operation of the Hydrodog business. Additionally, if the franchisee or their owners finance any part of the sale, these obligations must be subordinate to the transferee's obligations to pay royalties, marketing fund fees, and other amounts due to Hydrodog. The franchisee must also execute a subordination agreement to this effect. The proposed transferee must also meet Hydrodog's standards for franchisees, including demonstrating sufficient business experience, aptitude, and financial resources.