After the Bombs Away agreement expires, for how long are owners restricted from being employed by a competitor?

According to Bombs Away's 2024 Franchise Disclosure Document, after the franchise agreement expires or is terminated for any reason, the guarantor is subject to a non-compete restriction for two years. This restriction prevents the guarantor from having any ownership interest in, lending money or providing financial assistance to, providing any services to, or being employed by, any competitor. This restriction applies within the franchisee's territory or the territory of any other Bombs Away business operating on the date of termination or transfer.

This post-term non-compete agreement is a standard practice in franchising to protect the brand's market share and confidential information. The restriction applies regardless of the reason for termination, which means even if Bombs Away terminates the agreement, the franchisee is still bound by the non-compete terms. The agreement also specifies that if the guarantor fails to comply with these obligations, the restrictive period will be extended by an additional day for each day of noncompliance.

It is important to note that the agreement refers to a 'Guarantor,' which, based on other sections, appears to be an Owner who signs a personal guarantee. This means the non-compete primarily applies to the individual owners of the franchise, not necessarily the business entity itself. The FDD also mentions that if any part of the non-compete is deemed unenforceable, the intention is for a court or arbitrator to modify the restriction to protect Bombs Away's legitimate business interests.

Prospective franchisees should carefully consider the implications of this two-year non-compete restriction, especially if they plan to remain in the same industry after leaving the Bombs Away system. They should also seek legal advice to understand the enforceability of these provisions in their specific jurisdiction.