What are the Hydrodog franchisee's obligations regarding royalty payments (Item 6) and how does this relate to the franchisor's right to increase the royalty fee (Item 6)?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
ritory Fee shall not be prorated if the population of the additional territory is less than 50,000. The Additional Territory Fee is uniform, due in a lump sum, and fully earned and non-refundable upon payment.
- 6.3 Royalty. Beginning the first week following the week you open your HydroDog Business, and continuing throughout the remainder of the Term, you shall pay us a continuing nonrefundable weekly royalty fee ("Royalty(ies)") equal to the greater of (a) seven percent (7%) of Gross Sales or (b) two hundred fifty dollars ($250.00) per Territory. Royalties are payable to us every Monday for the previous calendar week (the "Payment Day"). If the Payment Day falls on a national holiday, the payment is due on the first weekday following the national holiday.
- 6.4 Technology Fee. You must pay to us or our designee a fee in the amount we designate from time to time for our proprietary software and technology services (the "Technology Fee"), which includes but is not limited to website listing, data hosting, scheduling system, customer relationship management (CRM), workflows, virtual assistant technology, and learning and development resources. The Technology Fee is currently $150 per month plus $99 per month for each HydroDog Vehicle. The Technology Fee is due on or before the first Payment Day in each month. We may increase this fee upon ninety (90) days written notice to you.
- 6.5 Initial Tools Package. If you have less than five (5) years' experience in grooming and/or you are not a certified groomer, you must purchase your Initial Tool Package from us (the "Initial Tools Fee").
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, franchisees are obligated to pay a continuing weekly royalty fee. This royalty is nonrefundable and is calculated as the greater of 7% of Gross Sales or $250.00 per Territory. These royalties are payable every Monday for the previous calendar week. If Monday falls on a national holiday, the payment is due on the first weekday following the national holiday.
While the franchise agreement outlines the royalty payment terms, it does not explicitly state that Hydrodog has the right to increase the royalty fee. However, the document does state that Hydrodog can increase the Technology Fee with a ninety (90) days written notice.
Additionally, franchisees must contribute to a Marketing Fund, initially set at 1% of Gross Sales each week. Hydrodog reserves the right to increase this Marketing Fund Fee to up to 2% of Gross Sales, providing thirty (30) days' written notice. These Marketing Fund Fees are paid in the same manner as the Royalty.
Prospective franchisees should carefully consider these payment obligations and the potential for fee increases, as they will directly impact the profitability and financial planning of their Hydrodog business. It would be prudent to discuss with Hydrodog the conditions under which the Technology Fee might be increased and to understand the historical frequency of such increases.