Does Hydrodog need to consider a franchisee's individual economic interests when making decisions under 'Reasonable Business Judgment'?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
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- (i) The word "owner" means any person holding a direct or indirect, legal or beneficial ownership interest or voting rights in another person (or a transferee of this Agreement or an interest in you), including any person who has a direct or indirect interest in you or this Agreement and any person who has any other legal or equitable interest, or the power to vest in himself any legal or equitable interest, in the revenue, profits, rights or assets.
- (j) The term "Reasonable Business Judgment" refers to any and all decisions, actions and/or choices made by us concerning and/or relating to this Agreement, the System, HydroDog Businesses and your HydroDog Business where we undertake and/or make such decision with the intention of benefitting and/or acting in a way that could benefit the System including, as examples and without limitation, enhancing the value of the Marks, increasing customer satisfaction, minimizing potential customer confusion as to the Marks, determining operating territory markets, minimizing potential customer confusion as to the location of HydroDog Businesses, expanding brand awareness of the Marks, implementing marketing and accounting control systems, approving products, services, supplies and equipment. Supplementing the foregoing, you acknowledge and agree that when a decision, determination, action and/or choice is made by us in our Reasonable Business Judgment that such decision, determination, action and/or choice made by us shall take precedence and prevail, even if other alternatives, determinations, actions and/or choices are reasonable or arguably available and/or preferable. You further acknowledge and agree that in connection with any decision, determination, action and/or choice made by us in our Reasonable Business Judgment that: (i) we possess a legitimate interest in seeking to maximize our profits;
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, Hydrodog's 'Reasonable Business Judgment' refers to decisions made with the intention of benefitting the Hydrodog system. This includes enhancing the value of the Marks, increasing customer satisfaction, minimizing potential customer confusion as to the Marks, determining operating territory markets, minimizing potential customer confusion as to the location of HydroDog Businesses, expanding brand awareness of the Marks, implementing marketing and accounting control systems, approving products, services, supplies and equipment.
The agreement specifies that Hydrodog can make decisions that may have negative consequences for individual franchisees. The FDD states that Hydrodog has the unrestricted right to make decisions and/or take (or refrain from taking) actions, except that they will not do so arbitrarily. This right exists even if a particular decision/action may have negative consequences for a franchisee, or a particular individual or group.
This clause emphasizes Hydrodog's focus on the overall system's health and brand consistency, even if it means that individual franchisee interests are not always prioritized. Prospective franchisees should understand that Hydrodog's decisions will be geared towards the broader network, and while these decisions are expected to be made in good faith and not arbitrarily, they may not always align with the immediate economic interests of each franchisee.