What is the geographic scope of the competitive restriction for a Hydrodog franchisee, considering other HydroDog Businesses?
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;
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, a franchisee is restricted from having a direct or indirect interest in a Competitive Business within certain geographic parameters. Specifically, a franchisee cannot have such an interest within their own Territory, within 25 miles of their Territory, or within 25 miles of any other HydroDog Business's Territory that is in operation or under development. This restriction applies from the later of either the termination or expiration date of the Franchise Agreement, or the date on which the franchisee ceases to have any direct or indirect interest in a Competitive Business.
The term "Competitive Business" is broadly defined as any business that offers pet grooming, pet care, pet products, or services that are identical, similar to, or competitive with the products and services offered by HydroDog Businesses. However, this definition excludes any HydroDog Business operating under a franchise agreement with Hydrodog. This means a franchisee can own and operate multiple Hydrodog franchises without violating the competitive restrictions.
This restriction is designed to protect Hydrodog's localized efforts and the company's overall development of HydroDog Businesses throughout the U.S. The FDD states that the time period, geographic area, and scope of these competitive restrictions are considered reasonably necessary to protect these interests. Furthermore, the agreement specifies that if any portion of these restrictions is deemed unenforceable, the agreement will be enforced to the fullest extent permissible under the law, potentially modifying the unenforceable provision to make it valid.
It is important for prospective franchisees to understand the scope and duration of these competitive restrictions, as violating them can lead to financial penalties. The FDD states that if a franchisee violates these restrictions, they will be required to pay liquidated damages equal to Hydrodog's then-current initial franchise fee within 15 calendar days of the violation. This payment is considered a reasonable estimate of the damages Hydrodog would incur, but it does not prevent Hydrodog from seeking other remedies, such as actual or consequential damages or injunctive relief.