What is the effect of transferring a Hydrodog franchise agreement on the franchisee's interest in the agreement?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
eys and independent accountants and the travel expenses, room and board and compensation of our employees. You also must pay us any shortfall in the amounts you owe us, including late fees and interest, within 10 days of our notice. The foregoing remedies are in addition to our other remedies and rights under this Agreement and applicable law.
15. TRANSFER
- 15.1 By Us. We have the exclusive right to transfer or assign this Agreement or any part of our rights or obligations under this Agreement to any person or legal entity, without your prior consent. You agree that we will have no liability after the effective date of the transfer or assignment for the performance of any obligations under this Agreement, unless otherwise stipulated in the terms of the transfer or assignment. You acknowledge 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. If the transfer is of this Agreement or a controlling interest in you, or is one of a series of transfers which in the aggregate constitute the transfer of this Agreement or a controlling interest in you, all of the following conditions must be met prior to or concurrently with the effective date of the transfer:
- (a) the transferee has sufficient business experience, aptitude and financial resources to operate your HydroDog Business;
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, the rights and duties within the franchise agreement are personal to the franchisee. Hydrodog grants the franchise based on their perception of the franchisee's character, skills, business ability, and financial capacity. Therefore, the franchisee cannot transfer the agreement, any interest in it, or any ownership interest that reduces their voting or equity interest below 51% without Hydrodog's prior written approval. Any transfer without this approval is considered a breach of the agreement and is void.
The term "transfer" includes voluntary, involuntary, direct, or indirect assignments, sales, gifts, or other dispositions of any interest in the agreement, the franchisee's entity, or the Hydrodog business. Specific events that constitute a transfer include the transfer of ownership of capital stock or a partnership interest, mergers or consolidations, the issuance of additional securities, and the sale of stock or securities convertible to stock.
To gain approval for a transfer, several conditions must be met. The proposed transferee must have sufficient business experience, aptitude, and financial resources to operate the Hydrodog business. The franchisee must have paid all royalties, marketing fund fees, and other amounts owed to Hydrodog or third-party creditors, and submitted all required reports. The transferee must also agree to complete Hydrodog's standard training program and be bound by the terms and conditions of the lease. Additionally, the transferee must sign Hydrodog's current franchise agreement. Subject to state law, a transfer fee of $20,000 per territory sold must be paid to Hydrodog. The franchisee and transferring owners must execute a general release of claims against Hydrodog and a non-competition covenant. Hydrodog must also approve the material terms and conditions of the transfer, ensuring that the price and terms of payment do not adversely affect the transferee's operation of the business.
In the event of death or disability, the franchisee is given 6 months (or 180 days) to transfer the business. If a franchise or an ownership interest is to be assigned, it must be assigned to an approved buyer within 3 months and run by a trained manager during the period prior to the assignment. The franchisee will have 6 months to transfer the HydroDog Business, and the assignment is subject to Hydrodog's right of first refusal.