If Hydrodog benefits economically from a decision made under 'Reasonable Business Judgment', does that automatically mean they didn't exercise reasonable business judgment?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Agreement, our "Business Judgment" means that we are allowed to exercise our judgment in a manner we deem fit, in our sole and absolute discretion, provided that such decisions are made in good faith and are not arbitrary or capricious. When this term is used in this Agreement it means that we have the unrestricted right to make decisions and/or take (or refrain from taking) actions, except that we will not do so arbitrarily. We have this right even if a particular decision/action may have negative consequences for you, or a particular individual or group. You understand and agree that the exercise of Business Judgment is critical to our role as Franchisor and to our goals for the System. This is a defined term for purposes of ease and clarity in this Agreement and is not intended and should not be construed to incorporate principles related to the application of the business judgment rule in a corporate law context.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, the brand retains certain rights under its 'Business Judgment,' which is defined in the agreement. Hydrodog is allowed to exercise judgment in a manner they deem fit, in their sole and absolute discretion, provided that such decisions are made in good faith and are not arbitrary or capricious. This means Hydrodog has the right to make decisions or take actions, even if those decisions or actions may have negative consequences for the franchisee.
The FDD states that the exercise of 'Business Judgment' is critical to Hydrodog's role as franchisor and to the goals for the Hydrodog system. The definition is included for clarity in the agreement and is not intended to incorporate principles related to the application of the business judgment rule in a corporate law context.
Therefore, the fact that Hydrodog benefits economically from a decision made under their 'Business Judgment' does not automatically mean they did not exercise reasonable business judgment, as long as the decision was made in good faith and was not arbitrary or capricious, according to the terms outlined in the franchise agreement.