What constitutes a breach of the Hydrodog Franchise Agreement regarding transfer of ownership?
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. In addition to examining the qualifications of the proposed transferee and other factors we deem relevant, in deciding whether to approve a transfer, we may also consider the length of time your HydroDog Business has been opened and whether transferring the location at the current time is in the best interest of the System. A transfer of ownership, possession or control of your HydroDog Business may be made only in conjunction with a transfer of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to the 2025 Hydrodog Franchise Disclosure Document, transferring the franchise without prior written approval from Hydrodog constitutes a breach of the agreement. The rights and duties within the agreement are personal to the franchisee, and Hydrodog grants the franchise based on their assessment of the franchisee's character, skills, business ability, and financial capacity. Therefore, any transfer of the agreement, or any ownership interest that reduces the franchisee's voting or equity interest to less than 51%, requires Hydrodog's approval.
The term "transfer" is broadly defined and includes both voluntary and involuntary assignments, sales, gifts, or other dispositions of any interest in the franchise agreement, the franchisee's business entity, or the Hydrodog business itself. Specific examples of such transfers include the transfer of ownership of capital stock or partnership interests, mergers or consolidations, the issuance of additional securities representing an ownership interest, and the sale of stock or securities convertible to stock.
Further, transfers can also occur through events like divorce, insolvency, corporate or partnership dissolution, or by operation of law. Transfers resulting from death or disability, including those by will, declaration of trust, or intestate succession, also fall under this definition. Even pledging the agreement or an ownership interest as security, foreclosure, or the loss of control or management of the Hydrodog business can be considered a transfer. Failing to transfer the interest in the agreement or ownership within a reasonable time, not exceeding six months (with a possible extension of another six months), after death or disability also constitutes a breach.
Prospective Hydrodog franchisees should understand that any form of transfer, whether direct or indirect, requires franchisor approval. Failure to obtain this approval will be considered a breach of the franchise agreement, potentially leading to termination of the franchise. Franchisees should carefully review Section 15 of the franchise agreement to fully understand the conditions and requirements for obtaining approval for any transfer.