factual

What are the consequences if a Bombs Away franchisee violates the non-compete clause or transfer provisions?

Bombs_Away Franchise · 2024 FDD

Answer from 2024 FDD Document

  • (v) Franchisee or any Owner commits a material violation of Section 7.2 (compliance with laws) or Section 13.1 (confidentiality), violates Section 13.2 (non-compete) or Article 15 (transfer), or commits any other violation of this Agreement which by its nature cannot be cured;

  • 14.3 Effect of Termination. Upon termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to

non-competition, confidentiality, indemnity, and dispute resolution, will remain in effect, and Franchisee must immediately:

  • (i) pay all amounts owed to Bombs Away Franchising based on the operation of the Business through the effective date of termination or expiration;

  • (ii) return to Bombs Away Franchising all copies of the Manual, Confidential Information and any and all other materials provided by Bombs Away Franchising to Franchisee or created by a third party for Franchisee relating to the operation of the Business, and all items containing any Marks, copyrights, and other proprietary items; and delete all Confidential Information and proprietary materials from electronic devices;

  • (iii) notify the telephone, internet, email, electronic network, directory, and listing entities of the termination or expiration of Franchisee's right to use any numbers, addresses, domain names, locators, directories and listings associated with any of the Marks, and authorize their transfer to Bombs Away Franchising or any new franchisee as may be directed by Bombs Away Franchising, and Franchisee hereby irrevocably appoints Bombs Away Franchising, with full power of substitution, as its true and lawful attorney-in-fact, which appointment is coupled with an interest; to execute such directions and authorizations as may be necessary or appropriate to accomplish the foregoing; and

  • (iv) cease doing business under any of the Marks.

  • 14.4 Remove Identification. If Franchisee operates from a Location other than Franchisee's home, then within 30 days after termination or expiration, Franchisee shall at its own expense "deidentify" the Location so that it no longer contains the Marks, signage, or any trade dress of a Bombs Away business, to the reasonable satisfaction of Bombs Away Franchising.

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, violating the non-compete or transfer provisions can lead to significant repercussions. Specifically, Bombs Away may terminate the Franchise Agreement if a franchisee materially violates Section 13.2 (non-compete) or Article 15 (transfer). This means Bombs Away can end the franchise relationship if the franchisee breaches these specific contractual obligations.

Upon termination or expiration of the Franchise Agreement, several obligations survive, including those related to non-competition, confidentiality, indemnity, and dispute resolution. The franchisee must immediately pay all outstanding amounts owed to Bombs Away, return all copies of the Manual, Confidential Information, and other materials, and cease using any of the Bombs Away Marks. Additionally, the franchisee must notify relevant entities about the termination of their right to use associated numbers, addresses, and domain names, and authorize their transfer to Bombs Away or a new franchisee.

Furthermore, if the franchisee operates from a location other than their home, they must de-identify the location within 30 days after termination or expiration, removing all Bombs Away Marks and trade dress. Failure to comply with the non-compete obligations can also result in the restrictive period being extended by an additional day for each day of noncompliance. This highlights the importance of adhering to these clauses to avoid potential legal and financial consequences.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.