Does the Hydrodog franchise agreement allow a third party to substitute their judgment for Hydrodog's 'Reasonable Business Judgment'?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Agreement, our "Business Judgment" means that we are allowed to exercise our judgment in a manner we deem fit, in our sole and absolute discretion, provided that such decisions are made in good faith and are not arbitrary or capricious. When this term is used in this Agreement it means that we have the unrestricted right to make decisions and/or take (or refrain from taking) actions, except that we will not do so arbitrarily. We have this right even if a particular decision/action may have negative consequences for you, or a particular individual or group. You understand and agree that the exercise of Business Judgment is critical to our role as Franchisor and to our goals for the System. This is a defined term for purposes of ease and clarity in this Agreement and is not intended and should not be construed to incorporate principles related to the application of the business judgment rule in a corporate law context.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to the 2025 Hydrodog Franchise Disclosure Document, the franchise agreement does not allow a third party to substitute their judgment for Hydrodog's "Reasonable Business Judgment." Instead, the agreement specifies that Hydrodog has the discretion to make decisions and take actions as it sees fit, provided those decisions are made in good faith and are not arbitrary or capricious.
The FDD defines "Business Judgment" as Hydrodog's right to exercise its judgment in a manner it deems fit, in its sole and absolute discretion, provided that such decisions are made in good faith and are not arbitrary or capricious. This means Hydrodog has the unrestricted right to make decisions, even if those decisions have negative consequences for franchisees.
This clause emphasizes Hydrodog's control over the franchise system and its operations. While franchisees may not agree with every decision, they are bound by the agreement to accept Hydrodog's judgment as long as it meets the criteria of good faith and non-arbitrariness. Prospective franchisees should carefully consider the implications of this clause and how it might affect their ability to operate their Hydrodog business independently.