Is a Bombs Away franchisee allowed to provide services to a competitor during the term of the agreement?

According to Bombs Away's 2024 Franchise Disclosure Document, franchisees are restricted from providing services to competitors during the term of their Franchise Agreement. Specifically, neither the franchisee, any owner, nor any spouse of an owner can directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any competitor during the term of the agreement. This restriction is in place to protect Bombs Away's business interests and maintain the integrity of its franchise system.

This in-term covenant not to compete prevents franchisees from using Bombs Away's resources, knowledge, and trade secrets to benefit a competing business. It ensures that the franchisee's efforts are solely dedicated to the success of their Bombs Away franchise. The FDD also states that if the franchisee is an entity, each owner must sign a personal guarantee, reinforcing their commitment to these obligations.

After the franchise agreement expires or is terminated, a similar restriction applies for two years. During this post-term period, the franchisee and other restricted parties are prohibited from engaging with any competitor operating within the franchisee's former territory or the territory of any other Bombs Away business. This extended restriction further safeguards Bombs Away's market position and prevents former franchisees from leveraging their experience to unfairly compete.

These covenants are designed to be independent of other provisions in the Franchise Agreement, and Bombs Away intends for courts or arbitrators to modify any overly broad restrictions only to the extent necessary to protect Bombs Away's legitimate business interests. Franchisees should carefully consider these non-compete obligations and their potential impact on future business opportunities before entering into a Franchise Agreement with Bombs Away.