Can a Hydrodog franchisee have a direct interest in a competitive business?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business, other than your HydroDog Business;
- (b) have any direct or indirect controlling interest as a disclosed or beneficial owner in a Competitive Business, wherever located;
- (c) have any direct or indirect interest (e.g. through a spouse or child) as a disclosed or beneficial owner, investor, partner, director, officer, employee, consultant, member, Manager, representative or agent or in any other capacity in any Competitive Business operating (i) within the Territory; (ii) within twenty-five (25) miles of the Territory; or (iii) within twenty-five (25) miles of any other HydroDog Business's Territory in operation or under development on the later of (a) the effective date of the termination or expiration of this Agreement or (b) the date on which you cease to have any direct or indirect interest in a Competitive Business;
- (d) perform services as a director, officer, Manager, employee, consultant, representative, agent or otherwise for a Competitive Business, wherever located; or
- (e) on behalf of yourself or any other person, or as an employee, proprietor, owner, consultant, agent, contractor, employer, affiliate, partner, officer, director or associate, or stockholder of any other person or entity, or in any other capacity, engage in or conduct any other business if you have any significant operational or management responsibility or obligation regarding such business, if such other business would interfere with your obligations under this Agreement to develop and operate your HydroDog business or otherwise (other than the HydroDog Businesses operated under franchise agreements with us), unless your HydroDog business is managed by a Chief Operating Officer, or equivalent position, approved by us, who has satisfactorily completed our training programs. This provision does not prohibit passive investments in other businesses that do not compete directly or indirectly with HydroDog business. However, an interest in a business in which your capacity is either a director, officer or majority stockholder (or any combination thereof) does not constitute a passive investment, and will be considered a breach of these provisions of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, franchisees face restrictions on having interests in competitive businesses. The FDD specifies that franchisees cannot have a direct or indirect interest in a Competitive Business, with some exceptions. A "Competitive Business" is defined as any business offering similar pet-related products or services, excluding other Hydrodog franchises.
The restrictions extend to various forms of involvement, including ownership, investment, or acting as a director, officer, employee, consultant, or agent. These restrictions apply not only within the franchisee's territory but also within twenty-five miles of it or any other Hydrodog location.
However, the agreement does allow for passive investments in non-competing businesses, provided the franchisee's role is not that of a director, officer, or majority stockholder. Any violation of these competitive restrictions may result in the franchisee paying liquidated damages equal to Hydrodog's then-current initial franchise fee.