Can Hydrodog deem a territory non-exclusive due to customer service failures?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge and agree that you must participate in any customer service program or customer retention program which we may establish from time to time.
You acknowledge and agree that your failure to comply in all respects with the requirements of any such customer service program or customer retention program, or your failure to achieve customer satisfaction results in accordance with our required customer satisfaction index score for any customer service program, as determined by us in our sole business judgment, or your failure to achieve our required customer retention rate for any customer retention program, as determined by us in our sole business judgment, shall be sufficient grounds for us in our sole business judgment to: (i) require your mandatory attendance at any remedial training program that we specify at your sole cost and expense, (ii) deem your Territory non-exclusive and authorize any other person to operate a HydroDog business within the Territory, (iii) impose monetary penalties as specified in our then-current operations manual, and/or (iv) terminate this Agreement effective immediately upon your receipt of our written notice to you.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, failure to comply with customer service programs can result in Hydrodog deeming a territory non-exclusive. Specifically, if a franchisee fails to meet the requirements of any customer service program or fails to achieve the required customer satisfaction index score, Hydrodog, in its sole business judgment, can deem the territory non-exclusive. This allows Hydrodog to authorize another person to operate a HydroDog business within the original franchisee's territory.
This provision highlights the importance Hydrodog places on customer service and satisfaction. It means that franchisees must actively participate in and adhere to any customer service programs implemented by Hydrodog. Furthermore, franchisees must ensure they achieve satisfactory customer satisfaction results as measured by Hydrodog's customer satisfaction index. The risk here is that Hydrodog has sole discretion in determining whether the franchisee has met these requirements.
For a prospective franchisee, this underscores the need to fully understand Hydrodog's customer service program requirements and the metrics used to evaluate customer satisfaction. It would be prudent to inquire about the specific details of these programs, the customer satisfaction index, and the historical performance data of other franchisees. Understanding these expectations is crucial to avoiding the potential loss of territorial exclusivity.
This type of clause is not uncommon in franchising, as franchisors often use performance metrics to ensure brand consistency and customer satisfaction across all locations. However, the degree of discretion afforded to Hydrodog in this case emphasizes the need for franchisees to proactively manage their customer service and maintain open communication with the franchisor.