Does the competitive restriction for Hydrodog apply if the Competitive Business is only under construction?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, the definition of a "Competitive Business" is broad and does not explicitly exclude businesses that are under construction. The FDD states that a Competitive Business includes any business or facility that offers pet-related products and services that are identical, similar to, or competitive with HydroDog's offerings, "whether now existing or hereafter developed".
This definition suggests that the competitive restrictions could apply even if a competing business is not yet operational but is in the process of being developed. The key factor is whether the business, once operational, would be competitive with HydroDog. The restrictions aim to prevent franchisees from engaging in activities that could undermine HydroDog's market position, which could include planning or developing a competing business.
Therefore, a prospective Hydrodog franchisee should seek clarification from the franchisor regarding whether the competitive restrictions extend to businesses under construction. Understanding the franchisor's interpretation of "Competitive Business" in this context is crucial for avoiding potential breaches of the franchise agreement and associated penalties, such as the payment of liquidated damages equivalent to the initial franchise fee.