Under what law might the Hydrodog franchise agreement provision for termination upon franchisee bankruptcy not be enforceable?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 21 of the Franchise Agreement will be subject to the Washington Franchise Investment Protection Act, RCW 19.100, and the rules adopted thereunder.
RCW 19.100.180 may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. There may also be court decisions which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.
In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, the Washington Franchise Investment Protection Act, specifically RCW 19.100, may supersede the franchise agreement regarding termination. This means that even if the Hydrodog franchise agreement allows for termination upon a franchisee's bankruptcy, this provision might not be enforceable in Washington State due to the protections afforded by the Act. Additionally, court decisions may also supersede the franchise agreement in the areas of termination and renewal.
For a prospective Hydrodog franchisee in Washington, this is a crucial piece of information. It suggests that the standard termination clauses in the franchise agreement might not be the final word, and the franchisee may have additional rights or protections under Washington law. This could be particularly relevant in situations involving financial distress or bankruptcy, where the franchisee might have more options than initially apparent from the franchise agreement itself.
It's important for potential Hydrodog franchisees to consult with legal counsel to fully understand their rights and obligations under both the franchise agreement and the Washington Franchise Investment Protection Act. This is especially critical if the franchisee anticipates any potential financial difficulties or if Hydrodog attempts to terminate the agreement based on bankruptcy or other financial reasons. Understanding the interplay between the franchise agreement and state law can help franchisees make informed decisions and protect their investment.
Furthermore, the FDD indicates that any arbitration or mediation involving a franchise purchased in Washington must occur in Washington State or a mutually agreed-upon location. This provides an additional layer of protection for franchisees in Washington, ensuring that disputes are resolved in a forum that is convenient and familiar to them.