Can Hydrodog impose a non-compliance fee if a franchisee fails to comply with System Standards?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
request your customers to participate in any surveys performed by us or on our behalf. You agree to correct or repair any unsatisfactory conditions we specify within 5 business days after receiving written notice from us, unless a shorter time period is required due to health, safety, or regulatory requirements.
We shall notify you if in our judgment as a result of an inspection, your HydroDog Business's and/or HydroDog Vehicle's appearance, equipment, signs or decor does not meet the System Standards, and to provide written notification of what actions you must take to correct the deficiency(ies). You shall, within thirty (30) days after receipt of this notice, take all steps needed to correct the deficiency(ies) or be subject to the non-compliance fee described in this Agreement for each area that was not corrected within the cure period. Additionally, we reserve the right, in our Reasonable Business Judgment, to correct the deficiency(ies) necessary to your HydroDog Business and/or the HydroDog Vehicle at your expense to ensure compliance with our System Standards. You agree you will reimburse for any and all costs of any and all modifications made in order to bring your HydroDog Business and/or the HydroDog Vehicle compliant. In the event you fail three inspections of your HydroDog Business in any 12-month period, we may, in our sole discretion, either: (i) terminate this Agreement; (ii) impose additional non-compliance fees; (iii) require additional training at your expense; (iv) temporarily suspend your operations until compliance is achieved; and/or (v) implement any other remedial measures we deem appropriate. These remedies are cumulative and in addition to any other rights or remedies we may have under this Agreement or applicable law.
14.2 Our Right to Audit. We have the right at any time during your business hours, and with three (3) days prior notice to you, to inspect and audit, or cause to be inspected and audited, your (if you are a Business Entity) and your HydroDog Business's business, bookkeeping and accounting records, sales and income tax records and returns and other records. You agree to cooperate fully with our representatives and independent accountants we hire to conduct any such inspection or audit. If our inspection or audit is made necessary by your failure to furnish reports, supporting records or other information we require, or to furnish such items on a timely basis, or if the information is not accurate (i.e., your Gross Sales are understated by two percent (2%) or more), you agree to reimburse us for the cost of such inspection or audit, including, without limitation, the charges of attorneys and independent accountants and the travel expenses, room and board and compensation of our employees. You also must pay us any shortfall in the amounts you owe us, including late fees and interest, within 10 days of our notice. The foregoing remedies are in addition to our other remedies and rights under this Agreement and applicable law.
15. TRANSFER
- 15.1 By Us. We have the exclusive right to transfer or assign this Agreement or any part of our rights or obligations under this Agreement to any person or legal entity, without your prior consent.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, Hydrodog can impose a non-compliance fee if a franchisee fails to comply with the terms of the agreement and/or System Standards. Specifically, if a franchisee fails to correct a deficiency within the stated cure period, Hydrodog can charge a non-compliance fee. The fee is $250 for the first instance of non-compliance, $500 for the second, and $750 for the third and any subsequent instances. Hydrodog may also choose to correct the deficiencies themselves at the franchisee's expense.
Hydrodog will provide written notification of the actions needed to correct any deficiencies identified during an inspection. Franchisees have 30 days to take the necessary steps to correct these deficiencies. Failure to correct the deficiencies within this cure period makes the franchisee subject to the non-compliance fees. Additionally, if a Hydrodog Business fails three inspections within a 12-month period, Hydrodog has the option to terminate the agreement, impose additional non-compliance fees, require additional training at the franchisee's expense, temporarily suspend operations, or implement other remedial measures.
It is important to note that Hydrodog's election to impose non-compliance fees does not waive or limit any other rights or remedies they may have under the agreement, including the right to terminate the agreement for the same or different breaches. If the non-compliance is monetary, Hydrodog reserves the right to notify the franchisee's credit union or banking institution. The franchisee agrees that the non-compliance fee and banking notification are in addition to any other rights or remedies Hydrodog may have under the agreement or at law. Furthermore, franchisees are obligated to comply with all modifications to System Standards, including Capital Modifications, within the time period Hydrodog specifies, or face a non-compliance fee.