Does the competitive restriction apply to a Hydrodog franchisee's activities as an employee or independent contractor?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
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- (a) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business, other than your HydroDog Business;
- (b) have any direct or indirect controlling interest as a disclosed or beneficial owner in a Competitive Business, wherever located;
- (c) have any direct or indirect interest (e.g. through a spouse or child) as a disclosed or beneficial owner, investor, partner, director, officer, employee, consultant, member, Manager, representative or agent or in any other capacity in any Competitive Business operating (i) within the Territory; (ii) within twenty-five (25) miles of the Territory; or (iii) within twenty-five (25) miles of any other HydroDog Business's Territory in operation or under development on the later of (a) the effective date of the termination or expiration of this Agreement or (b) the date on which you cease to have any direct or indirect interest in a Competitive Business;
- (d) perform services as a director, officer, Manager, employee, consultant, representative, agent or otherwise for a Competitive Business, wherever located; or
- (e) on behalf of yourself or any other person, or as an employee, proprietor, owner, consultant, agent, contractor, employer, affiliate, partner, officer, director or associate, or stockholder of any other person or entity, or in any other capacity, engage in or conduct any other business if you have any significant operational or management responsibility or obligation regarding such business, if such other business would interfere with your obligations under this Agreement to develop and operate your HydroDog business or otherwise (other than the HydroDog Businesses operated under franchise agreements with us), unless your HydroDog business is managed by a Chief Operating Officer, or equivalent position, approved by us, who has satisfactorily completed our training programs. This provision does not prohibit passive investments in other businesses that do not compete directly or indirectly with HydroDog business. However, an interest in a business in which your capacity is either a director, officer or majority stockholder (or any combination thereof) does not constitute a passive investment, and will be considered a breach of these provisions of this Agreement.
The term "Competitive Business" refers to any business or facility that owns, operates, manages, grants, sells, offers or supports franchises or licenses to others to do so, any mobile, fixed, or internet or catalog based business or facility that provides pet grooming, pet care, pet products or services, or any other pet-related products and services that are identical, similar to, or competitive with the Products and Services offered by HydroDog Businesses, whether now existing or hereafter developed, excluding any HydroDog Business under a franchise agreement with us, or any other business that we, at our sole discretion, determine to be competitive.
11.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, the competitive restrictions do apply to a franchisee's activities as an employee or independent contractor. Specifically, the agreement prohibits franchisees from performing services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, regardless of its location. This restriction extends beyond direct employment to include any role, whether as an employee or consultant, that benefits a competing business.
Furthermore, the agreement states that franchisees cannot engage in any other business where they have significant operational or management responsibility if that business interferes with their obligations to Hydrodog. This includes acting as an employee, proprietor, owner, consultant, agent, contractor, employer, affiliate, partner, officer, director, associate, or stockholder of any other person or entity. The only exception is if the Hydrodog business is managed by a Chief Operating Officer (or equivalent) approved by Hydrodog, who has completed their training programs.
Hydrodog also requires all employees and independent contractors who have access to confidential information to sign confidentiality and non-competition agreements. Hydrodog retains the right to regulate the form of these agreements and to be a third-party beneficiary with independent enforcement rights. This ensures that even those working for the franchisee are bound by similar competitive restrictions, protecting Hydrodog's interests and confidential information.
In summary, a Hydrodog franchisee is restricted from being an employee or independent contractor for a competing business, and must also ensure that their own employees and contractors with access to confidential information sign non-compete agreements. This is a common practice in franchising to protect the brand and prevent franchisees or their staff from using proprietary knowledge to benefit competitors.