What does the Bombs Away Disclosure Document contain in relation to the Franchise Agreement?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
This disclosure document summarizes certain provisions of the franchise agreement and other information in plain language. Read this disclosure document and all agreements carefully.
THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE OFFERING CIRCULAR.
The general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
THIS DISCLOSURE DOCUMENT CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL PROVISIONS OF THE FRANCHISE AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE REFERRED TO FOR A STATEMENT OF ALL RIGHTS, CONDITIONS, RESTRICTIONS AND OBLIGATIONS OF BOTH THE FRANCHISOR AND THE FRANCHISEE.
Minnesota Statutes, Section 80C.21 and Minnesota Rules 2860.4400(J) prohibit the franchisor from requiring litigation to be conducted outside Minnesota, requiring waiver of a jury trial, or requiring the franchisee to consent to liquidated damages, termination penalties or judgment notes.
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- Liquidated Damages and Termination Penalties: Requiring North Dakota franchisees to consent to liquidated damages or termination penalties.
The Franchise Agreement requires franchisee to sign a general release of claims upon renewal or transfer of the Franchise Agreement. California Corporations Code Section 31512 provides that any condition, stipulation or provision purporting to bind any person acquiring a franchise to waive compliance with any provision of that law or any rule or order thereunder is void.
The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).
The Franchise Agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.
The Franchise Agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to the 2024 Bombs Away Franchise Disclosure Document, the document itself summarizes certain provisions of the franchise agreement. It also states that a copy of all proposed agreements relating to the sale of the franchise must be delivered together with the offering circular in California. The disclosure document also contains addenda for various states that address how certain provisions of the franchise agreement may be interpreted or enforced within those specific jurisdictions.
For example, the Maryland addendum states that the general release required as a condition of renewal, sale, or transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law. The Michigan addendum specifies certain unfair provisions that are sometimes in franchise documents are void and cannot be enforced against the franchisee. The California addendum notes that certain provisions within the franchise agreement, such as those related to waivers, termination upon bankruptcy, covenants not to compete, and liquidated damages, may not be enforceable under California law.
Furthermore, the Hawaii addendum emphasizes that the disclosure document contains only a summary of certain material provisions of the franchise agreement and that the actual contract should be consulted for a complete understanding of all rights, conditions, restrictions, and obligations. The Minnesota addendum points out prohibitions against requiring litigation outside of Minnesota, waiving jury trials, or consenting to liquidated damages, termination penalties, or judgment notes. Similarly, the North Dakota addendum lists several provisions that cannot be enforced against North Dakota franchisees, including those related to liquidated damages, choice of law, waiver of jury trial, and general releases.