After the Bombs Away agreement is terminated, does the restriction on competitive activities apply to the franchisee's territory?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
For two years after the Franchise Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer by Guarantor), Guarantor shall not directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor operating in any of Franchisee's Territory or the territory of any other Bombs Away business operating on the date of termination or transfer, as applicable.
- (c) Interpretation.
Guarantor agrees that each of the foregoing covenants is independent of any other covenant or provision of this Guaranty or the Franchise Agreement.
If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any court or arbitrator, then the parties intend that the court or arbitrator modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Bombs Away Franchising.
Guarantor agrees that the existence of any claim it or Franchisee may have against Bombs Away Franchising shall not constitute a defense to the enforcement by Bombs Away Franchising of the covenants of this Section.
If Guarantor fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, if the Franchise Agreement is terminated for any reason, the guarantor (if applicable) is subject to certain restrictions. For two years after the termination or expiration of the Franchise Agreement, the guarantor cannot have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any competitor operating in the franchisee's territory or the territory of any other Bombs Away business operating on the date of termination or transfer.
This restriction applies regardless of the reason for termination, which means even if the franchisee terminates the agreement due to Bombs Away's violation of the agreement, the non-compete clause remains in effect for the guarantor. The guarantor also agrees that each covenant is independent of any other covenant or provision of the Guaranty or the Franchise Agreement.
If any part of the covenants is deemed unenforceable, the parties intend for a court or arbitrator to modify the restriction to protect Bombs Away's legitimate business interests. Noncompliance with these obligations extends the restrictive period by an additional day for each day of noncompliance. This post-term restriction is designed to protect Bombs Away's market presence and confidential information even after a franchise agreement ends.