Does Hydrodog have the right to negotiate with suppliers for price reductions, discounts, or rebates based on volume purchases?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the Franchise Agreement, you authorize us to collect any advertising monies or credits due from any of your distributors or other suppliers and any advertising or other rebates or any discounts from distributors and other suppliers based upon purchases or volume purchases by us and our franchisees (including purchases by you). We have the right to negotiate with suppliers, to obtain price reductions, discounts or rebates based on volume purchases. Unless these suppliers designate these payments specifically for advertising and promotion (in which case we will contribute them to the Marketing Fund), we can use these payments as we see fit. Any amounts contributed to the Marketing Fund will be in addition to all other amounts due or contributed under the Franchise Agreement. The Marketing Fund will not be audited. A statement of monies collected and expenditures made by the Marketing Fund will be prepared annually by us and will be provided to you. Any Marketing Fund contributions not spent in the fiscal year in which they accrue are carried over to the next fiscal year. As the Marketing Fund is not yet established, there have been no expenditures. No Marketing Fund contributions were collected in fiscal year 2024.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 22–30)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, Hydrodog retains the right to negotiate with suppliers for price reductions, discounts, or rebates based on the volume of purchases made by Hydrodog and its franchisees. Unless suppliers specifically designate these payments for advertising and promotion, in which case they are contributed to the Marketing Fund, Hydrodog can use these payments as it sees fit.
This arrangement benefits Hydrodog, as it can potentially increase its revenue or offset costs through negotiated discounts and rebates. However, it also stipulates that if these discounts are intended for advertising, they must be directed to the Marketing Fund, ensuring that franchisees benefit from collective marketing efforts.
The FDD also states that the Marketing Fund will furnish franchisees with approved marketing materials under the same terms and conditions as other franchisees. The Marketing Fund will not use more than 5% of its funds for advertising that is principally a solicitation for the sale of franchises and does not anticipate using over 20% for administrative items. A statement of monies collected and expenditures made by the Marketing Fund will be prepared annually by Hydrodog and provided to franchisees. Any Marketing Fund contributions not spent in the fiscal year in which they accrue are carried over to the next fiscal year. As the Marketing Fund is not yet established, there have been no expenditures. No Marketing Fund contributions were collected in fiscal year 2024.