What representations and warranties concerning liens and encumbrances are required when Hydrodog exercises its right of first refusal for my Hydrodog business?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right, exercisable by written notice delivered to you or your selling owner(s) within thirty (30) days from the date of the delivery to us of both an exact copy of such offer and all other information we request, to purchase such interest for the price and on the terms and conditions contained in such offer, provided that:
(a) we may substitute cash for any form of payment proposed in such offer (with a discounted amount if an interest rate will be charged on any deferred payments);
(b) our credit will be deemed equal to the credit of any proposed purchaser;
(c) we will have not less than sixty (60) days after giving notice of our election to purchase to prepare for closing; and
(d) we are entitled to receive, and you and your owners agree to make, all customary representations and warranties given by the seller of the assets of a business or the capital stock of an incorporated business, as applicable, including, without limitation, representations and warranties as to:
(i) ownership and condition of and title to stock or other forms of ownership interest and/or assets;
(ii) liens and encumbrances relating to the stock or other ownership interest and/or assets; and
(iii) validity of contracts and the liabilities, contingent or otherwise, of the corporation whose stock is being purchased.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, if you decide to sell your Hydrodog business and receive a legitimate offer, you must present Hydrodog with a copy of the offer. Hydrodog then has the option to purchase the business from you at the same price and terms as the offer.
If Hydrodog exercises its right of first refusal, you, as the seller, must provide customary representations and warranties. These include assurances about the ownership, condition, and title to the assets or stock, as well as details regarding any liens and encumbrances on those assets or ownership interests. You must also warrant the validity of contracts and disclose any liabilities, whether contingent or otherwise, affecting the business.
These representations and warranties are standard practice in business sales to protect the buyer (in this case, Hydrodog) from unforeseen issues or liabilities. They ensure that Hydrodog receives the business in the condition represented and with a clear understanding of any existing obligations or claims against it. This process helps to facilitate a smoother transaction and reduces the risk of future disputes.