Does the Bombs Away franchise agreement include a guaranty and non-compete agreement?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Issuance Date: February 9, 2024
I received a disclosure document that included the following Exhibits:
- A. State Addenda to Disclosure Document
- B. Franchise Agreement (with State Addenda to Agreements, Guaranty and Non-Compete Agreement, and Form of General Release)
- C. Item 21 Financial Statements
- D. State Administrators and Agents for Service of Process
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to the 2024 Bombs Away Franchise Disclosure Document, the franchise agreement includes both a guaranty and a non-compete agreement. Specifically, Exhibit B to the disclosure document includes the Franchise Agreement along with a Guaranty and Non-Compete Agreement.
The inclusion of a guaranty means that the franchisee, and potentially other individuals such as spouses or business partners, may be personally liable for the financial obligations of the franchise. This could put personal assets at risk if the Bombs Away franchise fails to meet its financial obligations.
The non-compete agreement restricts the franchisee's ability to engage in similar business activities during and after the term of the franchise agreement. In California, the FDD notes that a covenant not to compete which extends beyond the termination of the franchise may not be enforceable under California law. Prospective franchisees should carefully review the terms of the non-compete agreement and understand its implications for their future business endeavors, especially in light of state-specific regulations.