Under what circumstances does Hydrodog have the right of first refusal regarding the sale of my Hydrodog business?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
If you (or any of your owners) at any time determine to sell, assign or transfer for consideration an interest in this Agreement and your HydroDog Business or an ownership interest in you, you (or such owner) agree to obtain a bona fide, executed written offer and earnest money deposit (in the amount of five percent (5%) or more of the offering price) from a responsible and fully disclosed offeror (including lists of the owners of record and all beneficial owners of any corporate or limited liability company offeror and all general and limited partners of any partnership offeror) and immediately submit to us a true and complete copy of such offer, which includes details of the payment terms of the proposed sale and the sources and terms of any financing for the proposed purchase price.
To be a valid, bona fide offer, the proposed purchase price must be denominated in a dollar amount and must represent the actual consideration being paid for the interest being transferred, without any allocation of value to other assets or rights not covered by this right of first refusal.
The offer must apply only to an interest in you or in this Agreement and your HydroDog Business and may not include an offer to purchase any of your (or your owners') other property or rights.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, Hydrodog has the right of first refusal if a franchisee decides to sell their Hydrodog business. If a franchisee (or any of their owners) decides to sell, assign, or transfer their interest in the Franchise Agreement and Hydrodog business for consideration, they must first obtain a bona fide, executed written offer along with an earnest money deposit of at least five percent (5%) of the offering price from a responsible and fully disclosed offeror. The franchisee must then provide Hydrodog with a true and complete copy of this offer. This includes details of the payment terms for the proposed sale and the sources and terms of any financing for the proposed purchase price.
To be considered a valid offer, the proposed purchase price must be in a dollar amount and represent the actual consideration for the interest being transferred, without allocating value to other assets or rights not covered by the right of first refusal. The offer must apply only to the interest in the franchisee or the Franchise Agreement and Hydrodog business, and it cannot include an offer to purchase any of the franchisee's (or their owners') other property or rights.
This right of first refusal allows Hydrodog to maintain control over who enters the franchise system. It ensures that any potential new franchisee meets Hydrodog's standards and that the terms of the sale are fair and reasonable. For a prospective franchisee, this means that selling the business isn't solely their decision; Hydrodog has the opportunity to purchase the business themselves before it's sold to a third party. This is a fairly standard clause in franchise agreements, designed to protect the integrity and consistency of the brand.