If a Hydrodog franchisee transfers their agreement, what happens to their interest in the agreement?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
nowledge that we can sell our assets; sell securities in a public offering or in a private placement; merge with, acquire, or be acquired by another company; or undertake a refinancing, recapitalization, leveraged buy-out, or other economic or financial restructuring, without restriction and without affecting your obligations under this Agreement.
- 15.2 By You. You understand and acknowledge that the rights and duties created by this Agreement are personal to you (or, if you are a Business Entity, to your owners) and that we have granted the Franchise to you in reliance upon our perceptions of your (or your owners') individual or collective character, skill, aptitude, attitude, business ability and financial capacity. Accordingly, neither this Agreement (or any interest in it) nor any ownership or other interest that would reduce your voting or equity interest to less than 51% in you or your HydroDog Business may be transferred without our prior written approval. Any transfer without such approval constitutes a breach of this Agreement and is void and of no effect. As used in this Agreement, the term "transfer" includes your (or your owners') voluntary,
involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in: (a) this Agreement; (b) you; or (c) your HydroDog Business.
An assignment, sale, gift or other disposition includes the following events:
- (a) transfer of ownership of capital stock or a partnership interest;
- (b) merger or consolidation or issuance of additional securities or interests representing an ownership interest in you;
- (c) any issuance or sale of your stock or any security convertible to your stock;
- (d) transfer of an interest in you, this Agreement or your HydroDog Business in a divorce, insolvency or corporate or partnership dissolution proceeding or otherwise by operation of law;
- (e) transfer of an interest in you, this Agreement or your HydroDog Business, in the event of your death or the death of one of your owners, by will, declaration of or transfer in trust or under the laws of intestate succession; or
- (f) pledge of this Agreement (to someone other than us) or of an ownership interest in you as security, foreclosure upon your HydroDog Business or your transfer, surrender or loss of possession, control or management of your HydroDog Business.
- 15.3 Conditions for Approval of Transfer. If you (and your owners) are in full compliance with this Agreement, then subject to the other provisions of this Section, we will approve a transfer that meets all the applicable requirements of this Section. The proposed transferee and its direct and indirect owners must be individuals of good character and otherwise meet our then applicable standards for the HydroDog Business franchisees. In addition to examining the qualifications of the proposed transferee and other factors we deem relevant, in deciding whether to approve a transfer, we may also consider the length of time your HydroDog Business has been opened and whether transferring the location at the current time is in the best interest of the System. A transfer of ownership, possession or control of your HydroDog Business may be made only in conjunction with a transfer of this Agreement. If the transfer is of this Agreement or a controlling interest in you, or is one of a series of transfers which in the aggregate constitute the transfer of this Agreement or a controlling interest in you, all of the following conditions must be met prior to or concurrently with the effective date of the transfer:
- (a) the transferee has sufficient business experience, aptitude and financial resources to operate your HydroDog Business;
- (b) you have paid all Royalties, Marketing Fund Fees, contributions, amounts owed for purchases from us and all other amounts owed to us or to third-party creditors and have submitted all required reports and statements;
- (c) the transferee (or its owners) have agreed to complete our standard training program;
- (d) the transferee has agreed to be bound by, and assume, all of the terms and conditions of the Lease or enter into a new one for the remainder of the Lease term as approved by the lessor;
- (e) the transferee has signed our then-current franchise agreement;
- (f) subject to state law, you have paid to us a transfer fee of twenty thousand dollars ($20,000) per Territory sold;
- (g) if applicable, you have paid to us, or the respective third-party broker, any and all commissions or other fees due;
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, if a franchisee wishes to transfer their agreement, they must first obtain written approval from Hydrodog. The rights and duties within the franchise agreement are personal to the franchisee, and Hydrodog grants the franchise based on their assessment of the franchisee's character, skills, business ability, and financial capacity. Any transfer without Hydrodog's approval is considered a breach of the agreement and is void.
To gain approval for a transfer, several conditions must be met. The proposed transferee must demonstrate sufficient business experience, aptitude, and financial resources to operate the Hydrodog business. The franchisee must have paid all outstanding royalties, marketing fund fees, and other amounts owed to Hydrodog or third-party creditors, and have submitted all required reports. The transferee must also agree to complete Hydrodog's standard training program and be bound by the terms of the lease or enter into a new lease agreement. The transferee must sign Hydrodog's then-current franchise agreement.
Additionally, the franchisee must pay Hydrodog a transfer fee of $20,000 per territory sold, subject to state law, and cover any applicable commissions or fees to third-party brokers. The franchisee must also execute a general release of any claims against Hydrodog and its affiliates. Hydrodog must approve the material terms and conditions of the transfer, ensuring that the price and terms of payment do not adversely affect the transferee's operation of the Hydrodog business. If the franchisee finances any part of the sale price, their obligations must be subordinate to the transferee's obligation to pay Hydrodog. The franchise or an ownership interest in you must be assigned to an approved buyer within 3 months and must be run by a trained manager during the period prior to the assignment. You will have 6 months to transfer the HydroDog Business. Assignment is subject to our right of first refusal.
Hydrodog's consent to a transfer does not constitute a guarantee of the terms between the franchisee and transferee, nor does it guarantee the success of the business or waive any claims Hydrodog may have against the franchisee. Unless expressly stated in writing by Hydrodog, the transfer does not release the franchisee from their obligations under the original agreement. If the franchisee decides to sell their interest in the agreement and the Hydrodog business, they must obtain a bona fide written offer and earnest money deposit (at least 5% of the offering price) from a responsible offeror and submit it to Hydrodog, including details of payment terms and financing sources. Hydrodog then has the right of first refusal to purchase the franchise under the same terms.