Does Hydrodog require approval for the issuance or sale of stock or securities convertible to stock?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
(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;
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to the 2025 Hydrodog Franchise Disclosure Document, Hydrodog requires prior written approval for any issuance or sale of stock or securities convertible to stock. This requirement is part of a broader set of transfer restrictions outlined in the FDD. Specifically, any action that alters the ownership structure of the franchisee's business entity, such as issuing additional securities, is subject to Hydrodog's approval. This ensures that Hydrodog maintains control over who its franchisees are and that any new owners meet their standards.
This approval process is in place to allow Hydrodog to assess the qualifications of potential new owners and to ensure they meet the brand's standards for franchisees. Hydrodog may consider factors such as the transferee's business experience, aptitude, and financial resources. Additionally, Hydrodog wants to ensure that the proposed owner executes an agreement to be bound by, comply with, and guarantee the performance of all obligations under the franchise agreement.
For a prospective Hydrodog franchisee, this means that if they plan to issue stock or securities convertible to stock, they must first seek and obtain approval from Hydrodog. Failing to do so would constitute a breach of the franchise agreement and could render the transfer void. This requirement is typical in franchising, as franchisors want to control who becomes part of their system to protect the brand and ensure consistent operations.
Furthermore, the organizational documents of the franchisee's business entity must state that the issuance and transfer of any ownership interests are restricted by the terms of the agreement and subject to Hydrodog's approval. All certificates or documents representing ownership interests must also bear a legend referring to these restrictions. This ensures that any potential future buyers are aware of these restrictions before acquiring an interest in the franchise.