What happens if a Hydrodog franchisee fails to pay federal or state taxes?

According to Hydrodog's 2025 Franchise Disclosure Document, failure to pay federal or state income, service, sales, or other taxes due on the operations of your HydroDog Business can lead to termination of the franchise agreement. However, this is only the case if the franchisee is not in good faith contesting their liability for such taxes. This means that if a Hydrodog franchisee has a legitimate dispute over the taxes owed and is actively challenging the assessment, this clause may not apply.

It is important for a prospective Hydrodog franchisee to understand this provision, as tax obligations are a significant part of running a business. Franchisees should ensure they have a system in place to accurately calculate, report, and pay all applicable taxes. Failure to do so, without a good faith dispute, could result in the loss of their franchise.

This type of clause is relatively standard in franchise agreements, as franchisors want to ensure that their franchisees are operating legally and ethically. Tax evasion or significant tax delinquency by a franchisee could damage the reputation of the entire Hydrodog brand. Therefore, Hydrodog reserves the right to terminate the agreement to protect its interests.