sfer. We shall not be liable for any disputes between franchisees regarding customer account transfers or Customer Account Transfer Fees.

3. SUCCESSOR TERMS.

• 3.1 Renewal. Subject to the provisions of this Section, you shall have an option (exercisable only by written notice delivered to us by certified mail or overnight courier with proof of delivery, less than nine (9) months, but more than six (6) months, prior to the end of the initial term of this Agreement) to renew the franchise hereunder for up to one (1) additional period of ten (10) years, if the following conditions are met and provided that we, in our reasonable business judgment, agree to the renewal:
  • (a) you have been, throughout the initial term of this Agreement, in substantial compliance, and at the expiration of such initial term are current in all payments and in full compliance and not in default of this Agreement, the lease and all other agreements between you and us or companies associated or affiliated with us;
  • (b) you enter into our then-current franchise agreement (which may contain materially different terms, including, without limitation, higher fees, different territory rights, and modified operational requirements) and all other ancillary agreements, instruments and documents then customarily used by us in the granting of franchises (which then-current franchise agreement may materially differ from this Agreement, including a higher rate of fees, different methods of calculating fees due, and different payment methods, which shall be the same as those set out in the franchise agreements being executed at the time of renewal);

• (c) you are able to maintain possession of the HydroDog Vehicle, and agree to add or replace the HydroDog Vehicle, equipment and signs and otherwise modify the HydroDog Business as we require to bring it into compliance with specifications and standards then applicable for the HydroDog Businesses;
• (d) if you are unable to maintain possession of the HydroDog Vehicle, you secure substitute a HydroDog Vehicle we approve, develop such HydroDog Vehicle in compliance with specifications and standards then applicable for the HydroDog Businesses;
• (e) at the time the renewal option is exercised and at the time such renewal commences, all monetary obligations to us and any affiliate of ours and any of your suppliers must be current and must have been current at all times during the preceding twelve (12) months;
• (f) you execute a general release running in favor of us, our affiliates and our respective officers, directors and shareholders releasing all claims against us, our officers, directors and shareholders; and
• (g) you pay to us a non-refundable renewal fee equal to twenty thousand dollars ($20,000) per Territory, which fee shall be due and payable upon submission of your renewal notice and shall not be refundable under any circumstances, including our decision not to renew the franchise.
• 3.2 Refusal to Renew Franchise Agreement. We reserve the right to refuse to renew your franchise if you cannot satisfy the requirements in Section 3.1. We may also refuse to renew your franchise under other circumstances, including, but not limited to, your failure to substantially comply with the terms of this Agreement, your failure to pay amounts owed to us when due, or your failure to remedy any defaults incurred during the initial term of this Agreement, if applicable.
• 3.3 Renewal Under Law. Even though we may choose not to renew your franchise, certain laws, rules, regulations, statutes, ordinances, or legal orders that are applicable in your jurisdiction at the time may legally obligate us to do so. If that happens, to the extent it is allowed by the concerned law, rule, regulation, statute, ordinance or order, your renewal term will be subject to the conditions of the franchise agreement we are using for new franchisees at the time the renewal period begins. If we are not then offering new franchises, your renewal period will be subject to the terms in the franchise agreement that we indicate. If for any reason that is not allowed, the renewal term will be governed by the terms of this Agreement.
• 3.4 Your Election Not to Renew.

Source: Item 23 — RECEIPTS (FDD pages 43–166)