In the Hydrodog franchise agreement, what happens if other alternatives are arguably preferable to a decision made under '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 Hydrodog's 2025 Franchise Disclosure Document, the franchise agreement specifies that Hydrodog has the right to exercise its judgment in a manner it deems fit, in its sole and absolute discretion, provided such decisions are made in good faith and are not arbitrary or capricious. This is termed "Business Judgment" within the agreement.
Hydrodog retains this right even if a particular decision or action may have negative consequences for the franchisee or a particular individual or group. The FDD emphasizes that the exercise of Business Judgment is critical to Hydrodog's role as franchisor and to the goals for the Hydrodog system.
The agreement clarifies that the definition of "Business Judgment" is intended for ease and clarity within the franchise agreement and should not be construed to incorporate principles related to the application of the business judgment rule in a corporate law context. Therefore, even if a franchisee believes there are preferable alternatives to a decision made by Hydrodog under its Business Judgment, Hydrodog's decision stands as long as it's made in good faith and is not arbitrary.