Are Bombs Away franchisees and their owners allowed to be direct or indirect owners of any competitor?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
each Owner sign a personal guaranty of Franchisee's obligations to Bombs Away Franchising, in the form of Attachment 2.
- 2.6 No Conflict. Franchisee represents to Bombs Away Franchising that Franchisee and each of its Owners (i) are not violating any agreement (including any confidentiality or non-competition covenant) by entering into or performing under this Agreement, (ii) are not a direct or indirect owner of any Competitor, and (iii) are not listed or "blocked" in connection with, and are not in violation under, any anti-terrorism law, regulation, or executive order.
ARTICLE 3. TERM
- 3.1 Term. This Agreement commences on the Effective Date and continues for 10 years.
- 3.2 Successor Agreement. When the term of this Agreement expires, Franchisee may enter into a successor agreement subject to the following conditions prior to each expiration:
- (i) Franchisee notifies Bombs Away Franchising of the election to renew between 90 and 180 days prior to the end of the term;
- (ii) Franchisee (and its affiliates) are in compliance with this Agreement and all other agreements with Bombs Away Franchising (or any of its affiliates) at the time of election and at the time of renewal;
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees and their owners face restrictions regarding competitive interests. Specifically, during the term of the Franchise Agreement, the Guarantor (which includes owners if the franchisee is an entity) cannot 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. This restriction ensures that franchisees and their owners are fully committed to the Bombs Away system and do not divert resources or knowledge to competing businesses during the franchise term.
Post-term, for two years after the Franchise Agreement expires or is terminated, the Guarantor is similarly restricted from engaging with any Competitor operating within the franchisee's territory or the territory of any other Bombs Away business operating on the date of termination or transfer. This extended restriction aims to protect Bombs Away's market share and prevent former franchisees from leveraging their knowledge of the Bombs Away system to benefit a competitor in the same geographic area.
Furthermore, Bombs Away requires that franchisees represent that they and their owners are not direct or indirect owners of any Competitor when entering into the agreement. This initial representation underscores the importance Bombs Away places on preventing conflicts of interest from the outset of the franchise relationship. These measures collectively aim to safeguard Bombs Away's competitive position and ensure the franchisee's undivided loyalty to the brand, both during and for a period after the franchise agreement.