What constitutes a material breach of the Hydrodog agreement regarding territorial encroachment?

According to Hydrodog's 2025 Franchise Disclosure Document, engaging in three or more unauthorized territorial encroachments within any twelve-month period is considered a material breach of the franchise agreement. This means that if a franchisee repeatedly provides services in another franchisee's designated territory without proper authorization, Hydrodog has the right to immediately terminate the agreement.

Before providing services in another franchisee's territory, a Hydrodog franchisee must obtain written permission from both the other franchisee and Hydrodog itself. If a franchisee services a client in another franchisee's territory without this permission or without providing the required written notice, it is considered a violation of the agreement. In such cases, Hydrodog will provide written notice, and the franchisee must cease providing services in the other territory within 48 hours (with an exception for pre-scheduled appointments within the next seven days). The franchisee may also be required to pay an encroachment fee of $500 to Hydrodog and $500 to the other franchisee.

The consequences of territorial encroachment can be significant for a Hydrodog franchisee. While a single instance may result in fees and a requirement to cease services, repeated violations can lead to the termination of the franchise agreement. This highlights the importance of understanding and respecting territorial boundaries, as well as adhering to the proper procedures for obtaining permission to operate outside of one's designated area. Prospective franchisees should carefully review the terms of the franchise agreement and seek clarification from Hydrodog regarding any questions or concerns about territorial rights and restrictions.