What constitutes a 'transfer' of a Bombs Away franchise by the franchisee?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or | Summary |
|---|---|---|
| other agreement | ||
| f. Termination by | § 14.2 | We may terminate your franchise |
| franchisor with cause | agreement for cause, subject to any applicable notice and cure opportunity. | |
| g. “Cause” defined-- | Non-payment by you (10 days to cure); | |
| curable defaults | violate franchise agreement other than non- curable default (30 days to cure). | |
| h. “Cause” defined--non- | Misrepresentation when applying to be a | |
| curable defaults | franchisee; knowingly submitting false information; bankruptcy; violation of law; violation of confidentiality; violation of non-compete; violation of transfer restrictions; slander or libel of us; refusal to cooperate with our audit or evaluation; cease operations for more than 15 consecutive days; three defaults in 12 months; cross-termination; conviction of, or plea to, a felony, commit or be accused of an act that is reasonably likely to materially and unfavorably affect our brand; any other breach of franchise agreement which by its nature cannot be cured. | |
| i. Franchisee’s obligations | Pay all amounts due; return Manual and | |
| on termination/non- | ||
| renewal | proprietary items; notify phone, internet, and other providers and transfer service; cease doing business; remove identification; purchase option by us. | |
| j. Assignment of | Unlimited Unlimited | |
| agreement by franchisor | ||
| k. “Transfer” by franchisee | For you (or any owner of your business) to | |
| - defined | voluntarily or involuntarily transfer, sell, or dispose of, in any single or series of transactions, (i) substantially all of the assets of the business, (ii) the franchise agreement, (iii) any direct or indirect ownership interest in the business, or (iv) control of the business. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 28–31)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, a 'transfer' by the franchisee is comprehensively defined. It includes any instance where the franchisee, or any owner of the business, voluntarily or involuntarily transfers, sells, or disposes of the business through a single transaction or a series of transactions. This broad definition covers several scenarios.
Specifically, a transfer occurs if substantially all of the assets of the Bombs Away business are transferred. It also includes the transfer of the franchise agreement itself. Furthermore, any direct or indirect ownership interest in the Bombs Away business being transferred constitutes a transfer under the agreement. Finally, the transfer of control of the Bombs Away business, regardless of the means, is also considered a transfer.
This definition is important for prospective Bombs Away franchisees because it clarifies that any significant change in ownership, assets, or control of the franchise requires franchisor approval. This is a common provision in franchise agreements, designed to protect the brand and ensure that new operators meet the franchisor's standards. Franchisees need to be aware that any action that could be construed as a transfer, even if not explicitly a sale, is subject to Bombs Away's scrutiny and approval.