What is the transaction price defined as for a Hydrodog franchise?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
17.5 Our Right to Purchase.
- (a) Exercise of Option. Upon our termination of this Agreement in accordance with its terms and conditions, or your termination of this Agreement without cause, we reserve the right, exercisable by providing written notice to you within sixty (60) days from the date of such termination, to purchase the Business from you, including the leasehold rights to the HydroDog Vehicle. (The date on which we notify you whether or not we are exercising our option is referred to in this Agreement as the "Notification Date"). We have the unrestricted right to assign this option to purchase the Business. We will be entitled to all customary warranties and representations in connection with our asset purchase, including, without limitation, representations and warranties as to ownership and condition of and title to assets; liens and encumbrances on assets; validity of contracts and agreements; and liabilities affecting the assets, contingent or otherwise.
- (b) Leasehold Rights. You agree at our election, and at your own expense:
- (i) To assign your leasehold interest in the HydroDog Vehicle to us;
- (ii) To enter into a sublease for the remainder of the lease term on the same terms (including renewal options) as the prime lease; or
- (iii) To lease to us if you own the HydroDog Vehicle in accordance with the Agreement to Lease.
- (b) Leasehold Rights. You agree at our election, and at your own expense:
- (c) Purchase Price. The purchase price for the Business will be its fair market value, determined in a manner consistent with reasonable depreciation of the Business's equipment, signs, inventory, materials and supplies; provided that the Business will be valued as an independent business and its value will not include any value for:
- (i) The Franchise or any rights granted by this Agreement;
- (ii) The Marks or Copyrights; or
- (iii) Participation in the network of the HydroDog Businesses.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, when Hydrodog exercises its option to purchase the business from a franchisee upon termination of the agreement, the purchase price is defined as the fair market value of the business. This fair market value is determined in a manner consistent with reasonable depreciation of the business's equipment, signs, inventory, materials, and supplies.
However, the valuation specifically excludes any value associated with the Hydrodog franchise itself, the rights granted by the franchise agreement, the trademarks or copyrights associated with the brand, or participation in the Hydrodog network. This means that the franchisee will not be compensated for the brand recognition, goodwill, or the value of being part of the Hydrodog system when the business is purchased by Hydrodog.
This valuation method is important for prospective franchisees to understand, as it outlines how their business will be valued if Hydrodog decides to purchase it upon termination. The exclusion of franchise-related value drivers could result in a lower purchase price than if the business were valued as an ongoing franchise operation. Franchisees should consider this when assessing the potential return on investment and the overall financial viability of the Hydrodog franchise.