Is B Bops required to institute legal proceedings to collect amounts owing from a franchisee?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
the new location.
-
- EVENTS UPON TERMINATION OR EXPIRATION. Upon termination of this Agreement, or upon expiration of the Term of this Agreement without renewal, Franchisee agrees as follows:
- A. Franchisee shall no longer be entitled to operate a B-Bop's Restaurant on the Franchise Premises or at any other location, nor in any other manner at any location whatsoever utilize all or any portion of the Licensed System (including, but not limited to, the proprietary recipes) or any of the Licensed Marks, provided that termination or expiration of this Agreement shall not affect the right of Franchisee to operate any other B-Bop's Restaurant in accordance with the terms of a franchise agreement between the parties;
- B. Franchisee shall cease to hold itself out to the public as being a B-Bop's Restaurant and shall avoid any other conduct which would suggest or indicate any relationship between Company and Franchisee, except to the extent permitted by paragraph A above;
- C. Franchisee shall pay Company or its affiliates on demand all fees and
amounts then owing to Company or its affiliates under the terms of this Agreement and any other amounts owing to Company or its affiliates under any other agreement relating to the Franchise;
- D.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
Based on the 2025 FDD, the franchise agreement for B Bops does not explicitly state that the company is required to institute legal proceedings to collect amounts owed by a franchisee. However, the agreement does stipulate that upon termination or expiration of the agreement, the franchisee is obligated to pay B Bops or its affiliates, on demand, all outstanding fees and amounts owed under the agreement, as well as any other amounts owed under any other agreement related to the franchise. This suggests that B Bops has the right to demand payment of outstanding debts.
Additionally, the personal guaranty section of the franchise agreement states that the individuals signing the guaranty personally and unconditionally guarantee full and prompt payment to B Bops or its affiliates for any indebtedness of the franchisee arising under the agreement or any other agreement between the parties. This clause strengthens B Bops's position in recovering debts, as it can pursue the guarantors directly for the franchisee's obligations.
While the FDD excerpts do not mandate B Bops to pursue legal action, the combination of the franchisee's payment obligations upon termination and the personal guarantees provided by the franchisee's principals provide B Bops with strong contractual rights to collect outstanding amounts, potentially through legal means if necessary. A prospective franchisee should clarify with B Bops what specific actions the company might take to collect outstanding debts, including the circumstances under which legal proceedings would be initiated.