What is the meaning of 'relying on the document' in the context of the Big Air Trampoline Park document?
Big_Air_Trampoline_Park Franchise · 2025 FDDAnswer from 2025 FDD Document
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Item 5 of the Franchise Disclosure Document, Section 5.1 of the Franchise Agreement and Section 3.2 of the Multi-Unit Development Agreement are revised to include the following:
The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a requirement for us to maintain surety bonds under California Corporations Code section 31113 and 10 C.C.R. section 310.11.5 which must remain in effect during our registration period. Big Air Franchising, LLC has two surety bonds in California. The first surety bond is in the amount of $60,000.00 with Atlantic Specialty Insurance Company. The second surety bond is in the amount of $240,000 with Travelers Casualty and Surety Company of America. The bonds are available for you
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to the 2025 Big Air Trampoline Park Franchise Disclosure Document, the phrase 'relying on the document' is not explicitly defined. However, Item 5 of the Franchise Disclosure Document, Section 5.1 of the Franchise Agreement, and Section 3.2 of the Multi-Unit Development Agreement are revised to include a statement regarding the franchisor's capitalization. Specifically for California, the Department has determined that Big Air Franchising, LLC has not demonstrated adequate capitalization and/or must rely on franchise fees to fund operations.
To address this, the Commissioner has mandated that Big Air Trampoline Park maintain surety bonds under California Corporations Code section 31113 and 10 C.C.R. section 310.11.5, which must remain effective during the registration period. Big Air Franchising, LLC has two surety bonds in California: one for $60,000.00 with Atlantic Specialty Insurance Company and another for $240,000 with Travelers Casualty and Surety Company of America. These bonds are in place so that a franchisee can recover damages if Big Air Trampoline Park fails to fulfill its obligations to open the franchised business. The FDD states that a copy of the surety bonds will be provided upon request.
This requirement of surety bonds suggests that California regulators have concerns about the financial stability of Big Air Trampoline Park. Prospective franchisees in California should carefully consider this and request copies of the surety bonds to understand the protections available to them. They should also seek legal and financial advice to assess the risks associated with investing in a franchise where the franchisor is deemed to be relying on franchise fees for its operations.