Does Bombs Away Franchising have to approve a transfer to a co-owner?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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, a transfer to a co-owner does not require Bombs Away Franchising's consent. Specifically, Bombs Away Franchising has a right of first refusal before a franchisee engages in a transfer, but this right does not apply to transfers to a co-owner.
However, it is important to note that while Bombs Away's right of first refusal may not apply, other transfer requirements outlined in Section 15.2 of the franchise agreement may still be applicable. These requirements include providing Bombs Away Franchising with at least 60 days prior notice of the proposed transfer and fulfilling any conditions Bombs Away Franchising may impose. These conditions can include paying a transfer fee of $7,500 plus broker fees and costs, ensuring the co-owner meets Bombs Away's standards for new franchisees, and having the co-owner execute Bombs Away's current franchise agreement and provide a guaranty.
Therefore, while a transfer to a co-owner is exempt from Bombs Away's right of first refusal, franchisees must still comply with the general transfer provisions in the franchise agreement. Franchisees should carefully review Article 15 of the franchise agreement and consult with Bombs Away Franchising to ensure full compliance when considering a transfer to a co-owner.