After the death or incapacity of a Bombs Away franchisee, to whom can the business be transferred?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.4 Transfer upon Death or Incapacity. Upon the death or incapacity of Franchisee (or, if Franchisee is an entity, the Owner with the largest ownership interest in Franchisee), the executor, administrator, or personal representative of that person must Transfer the Business to a third party approved by Bombs Away Franchising (or to another person who was an Owner at the time of death or incapacity of the largest Owner) within nine months after death or incapacity. Such transfer must comply with Section 15.2.
- 15.5 Bombs Away Franchising's Right of First Refusal. Before Franchisee (or any Owner) engages in a Transfer (except under Section 15.3, or to a co-Owner, or to a spouse, sibling, or child of an Owner), Bombs Away Franchising will have a right of first refusal, as set forth in this Section. Franchisee (or its Owners) shall provide to Bombs Away Franchising a copy of the terms and conditions of any Transfer. For a period of 30 days from the date of Bombs Away Franchising's receipt of such copy, Bombs Away Franchising will have the right, exercisable by notice to Franchisee, to purchase the assets subject of the proposed Transfer for the same price and on the same terms and conditions(except that Bombs Away Franchising may substitute cash for any other form of payment). If Bombs Away Franchising does not exercise its right of first refusal, Franchisee may proceed with the Transfer, subject to the other terms and conditions of this Article.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, in the event of the death or incapacity of a franchisee, or the owner with the largest ownership interest if the franchisee is an entity, their executor, administrator, or personal representative is required to transfer the Bombs Away business within nine months.
The transfer can be made to a third party approved by Bombs Away Franchising or to another person who was an owner at the time of death or incapacity of the largest owner. This transfer is subject to the conditions outlined in Section 15.2 of the franchise agreement, which likely includes Bombs Away's approval of the transferee.
Bombs Away Franchising also retains a right of first refusal, allowing them to purchase the assets of the franchise under the same terms and conditions as any proposed transfer, except they can substitute cash for other forms of payment. This right of first refusal does not apply to transfers to co-owners, or to a spouse, sibling, or child of an owner. This provision ensures that Bombs Away maintains control over who enters into the franchise system, even in unforeseen circumstances such as death or incapacity.