Does the Hydrodog Guaranty allow for set-off, deduction, or withholding from payments?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.15 Payment Offsets. You acknowledge and agree that we have the right to set-off from any amounts that we may owe you or your owners or any amount that you owe to us, or our affiliates, for any reason whatsoever, including without limitation, Royalties, Marketing Fund Fees, Late Payment Fees and interest on late payments, amounts owed to us or our affiliates for purchases or services or for any other reason.
Thus, payments that we or our affiliates may make to you may be reduced, in our discretion, by amounts that you owe to us or our affiliates from time-to-time.
We will notify you monthly if we elect to do so.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, Hydrodog retains the right to offset any amounts it owes to a franchisee against any debts the franchisee owes to Hydrodog or its affiliates. This includes, but is not limited to, royalties, marketing fund fees, late payment fees, and interest on late payments, as well as amounts owed for purchases or services. This means that if a Hydrodog franchisee is due a payment from Hydrodog for any reason, Hydrodog can reduce that payment by any outstanding debts the franchisee has.
Hydrodog will notify the franchisee monthly if they elect to exercise this right of offset. Additionally, Hydrodog can offset amounts owed to them if the franchisee fails to maintain trade accounts, pay taxes, or fulfill nonmonetary obligations to third parties. In such cases, Hydrodog may pay these amounts or perform these obligations on behalf of the franchisee and then seek reimbursement, which can also be offset against any amounts Hydrodog owes the franchisee.
This set-off provision is a standard practice in franchising agreements, allowing franchisors to ensure they receive all payments due from franchisees. However, it's crucial for prospective Hydrodog franchisees to understand that any potential payments from Hydrodog could be reduced by outstanding debts. Franchisees should maintain diligent records of all payments and obligations to avoid any discrepancies or unexpected offsets. This also means that Hydrodog has the right to reduce the purchase price of the franchise by any and all amounts that the franchisee or their owners owe to them.