What are the potential consequences if a Hydrodog franchisee fails to comply with System Standards or Capital Modifications?

According to Hydrodog's 2025 Franchise Disclosure Document, a franchisee's failure to comply with System Standards or Capital Modifications within the specified time period can lead to several consequences. These include a non-compliance fee, mandatory remedial training at the franchisee's expense, suspension of the franchisee's rights under the Franchise Agreement until compliance is achieved, and/or termination of the Franchise Agreement, as determined by Hydrodog's sole discretion. Hydrodog may periodically modify System Standards, potentially requiring franchisees to invest additional capital in their HydroDog Business or incur higher operating costs. However, such modifications will not alter the franchisee's fundamental status and rights under the agreement, and Hydrodog agrees to give franchisees at least ninety (90) days to comply with Capital Modifications.

Hydrodog also outlines a process for addressing deficiencies identified during inspections. If a HydroDog Business or Vehicle does not meet System Standards, the franchisee will receive written notification of the necessary corrective actions. The franchisee then has thirty (30) days to correct the deficiencies. Failure to do so subjects the franchisee to a non-compliance fee for each uncorrected area. Hydrodog also reserves the right to correct the deficiencies at the franchisee's expense to ensure compliance with System Standards, and the franchisee agrees to reimburse Hydrodog for all costs incurred.

Furthermore, if a Hydrodog franchisee fails three inspections in any 12-month period, Hydrodog has the discretion to take more severe actions. These actions include terminating the Franchise Agreement, imposing additional non-compliance fees, requiring additional training at the franchisee's expense, temporarily suspending operations until compliance is achieved, or implementing any other remedial measures deemed appropriate by Hydrodog. These remedies are cumulative and in addition to any other rights or remedies Hydrodog may have under the Franchise Agreement or applicable law. This demonstrates the importance of maintaining Hydrodog's standards to avoid penalties and potential termination of the franchise agreement.