Is Bombs Away allowed to obtain benefits from a franchisee's business transactions without proper accounting and transmission to the franchisee?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee obtains a customer in the protected territory of another franchisee, then, in addition to all other rights and remedies Bombs Away Franchising may have, Bombs Away Franchising may in its discretion (i) require Franchisee to transfer the customer to such other franchisee, (ii) require Franchisee to pay such other franchisee 75% of the Gross Sales received from such customer, or (iii) fashion such other remedy as Bombs Away Franchising deems appropriate.
- (e) Referrals.
Bombs Away Franchising may set policies binding on all franchisees regarding referral fees (and other terms and conditions) when a customer is referred from one Bombs Away business to another.
Bombs Away Franchising may waive or modify such policies in any circumstance as Bombs Away Franchising determines.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Bombs Away Franchising has specific rights regarding customer transactions, particularly when a franchisee obtains a customer in another franchisee's protected territory. In such instances, Bombs Away has the discretion to implement one of several remedies. These include requiring the franchisee to transfer the customer to the franchisee whose territory was encroached upon.
Alternatively, Bombs Away Franchising can mandate that the franchisee who obtained the customer in the protected territory pay the other franchisee 75% of the gross sales received from that customer. The FDD also states that Bombs Away Franchising can fashion such other remedy as it deems appropriate.
Furthermore, Bombs Away Franchising retains the authority to set policies regarding referral fees when a customer is referred from one Bombs Away business to another, and it may waive or modify such policies as it determines. These stipulations grant Bombs Away Franchising considerable latitude in managing customer relationships and financial transactions between franchisees, potentially impacting a franchisee's revenue and customer base.