Under the Hydrodog agreement, what is the effect of a breach by affiliates, successors, or assigns?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
nowledge that we can sell our assets; sell securities in a public offering or in a private placement; merge with, acquire, or be acquired by another company; or undertake a refinancing, recapitalization, leveraged buy-out, or other economic or financial restructuring, without restriction and without affecting your obligations under this Agreement.
- 15.2 By You. You understand and acknowledge that the rights and duties created by this Agreement are personal to you (or, if you are a Business Entity, to your owners) and that we have granted the Franchise to you in reliance upon our perceptions of your (or your owners') individual or collective character, skill, aptitude, attitude, business ability and financial capacity. Accordingly, neither this Agreement (or any interest in it) nor any ownership or other interest that would reduce your voting or equity interest to less than 51% in you or your HydroDog Business may be transferred without our prior written approval. Any transfer without such approval constitutes a breach of this Agreement and is void and of no effect. As used in this Agreement, the term "transfer" includes your (or your owners') voluntary,
involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in: (a) this Agreement; (b) you; or (c) your HydroDog Business.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
Based on the 2025 Hydrodog Franchise Disclosure Document, if a franchisee attempts to transfer the agreement without prior written approval from Hydrodog, it constitutes a breach of the agreement, rendering the transfer void and of no effect. The rights and duties within the agreement are personal to the franchisee, and Hydrodog grants the franchise based on their perception of the franchisee's character, skills, aptitude, business ability, and financial capacity.
Specifically, any transfer that reduces the franchisee's voting or equity interest to less than 51% requires prior written approval from Hydrodog. The term "transfer" encompasses both voluntary and involuntary actions, including direct or indirect assignments, sales, gifts, or other dispositions of interest in the agreement, the franchisee's business entity, or the Hydrodog business itself.
These restrictions extend to events such as the transfer of ownership of capital stock or partnership interests, mergers or consolidations, the issuance of additional securities representing an ownership interest, and any issuance or sale of stock or securities convertible to stock. Hydrodog retains broad discretion over transfers to ensure that the new controlling party meets their standards.
This clause protects Hydrodog by ensuring that the person operating the franchise meets their standards and has the required capabilities. A prospective franchisee should carefully consider these transfer restrictions and discuss any potential future ownership changes with Hydrodog upfront.