If the Hydrodog franchisee is a Business Entity, are the owners personally liable for breaches of the Franchise Agreement?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
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We grant to qualified individuals or entities, who are prepared to make the necessary investment and effort, a franchise to operate a HydroDog Business within a geographic area that we approve (the "Franchise"). HydroDog Businesses operate under the Marks and under the System. Our current form of Franchise Agreement is attached as Exhibit "B" (the "Franchise Agreement"). If you are a corporation, limited liability company or limited partnership (a "Business Entity"), your owners will sign our principal owner's guaranty (the "Principal Owner's Guaranty") our current form of which is attached to the Franchise Agreement as Exhibit "B." If you are an individual owner/operator, you must be trained as a professional dog groomer through either: (i) an approved certification program, (ii) an apprenticeship program of not less than one (1) month and not more than three (3) months, or (iii) attendance at a third-party dog grooming academy or school that we approve, prior to attending our Initial Training.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 34–35)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, if a franchisee is a Business Entity such as a corporation, limited liability company, or limited partnership, the owners are required to sign a Principal Owner's Guaranty. This guaranty, attached as Exhibit "B" to the Franchise Agreement, ensures that the owners will personally guarantee the franchisee's performance under the agreement.
Furthermore, if the franchisee is an entity, all individuals owning 20% or more of the beneficial ownership interests in the entity, along with their respective spouses, must personally and unconditionally guarantee the franchise owner's performance. This is done by signing the Owners Agreement, which is included as Attachment D to the agreement.
Hydrodog also requires the franchisee to designate one owner as the Designated Owner, who has the authority to make decisions and bind the franchise owner in all matters pertaining to the Franchise Agreement and the Hydrodog Business. This Designated Owner is the primary point of contact between the franchisee and Hydrodog. These stipulations ensure that Hydrodog has recourse to the owners' personal assets should the business entity fail to meet its obligations under the Franchise Agreement.