Can Bombs Away Franchising impose conditions on a franchisee transfer, and if so, what examples are provided?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
hisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing Bombs Away Franchising at least 60 days prior notice of the proposed Transfer, and without obtaining Bombs Away Franchising's consent. In granting any such consent, Bombs Away Franchising may impose conditions, including, without limitation, the following:
- (i) Bombs Away Franchising receives a transfer fee equal to $7,500 plus any broker fees and other out-of-pocket costs incurred by Bombs Away Franchising;
- (ii) the proposed assignee and its owners have completed Bombs Away Franchising's franchise application processes, meet Bombs Away Franchising's then-applicable standards for new franchisees, and have been approved by Bombs Away Franchising as franchisees;
- (iii) the proposed assignee is not a Competitor;
- (iv) the proposed assignee executes Bombs Away Franchising's then-current form of franchise agreement and any related documents, which form may contain materially different provisions than this Agreement (provided, however, that the proposed assignee will not be required to pay an initial franchise fee);
- (v) all owners of the proposed assignee provide a guaranty in accordance with Section 2.5;
- (vi) Franchisee has paid all monetary obligations to Bombs Away Franchising and its affiliates, and to any lessor, vendor, supplier, or lender to the Business, and Franchisee is not otherwise in default or breach of this Agreement or of any other obligation owed to Bombs Away Franchising or its affiliates;
- (vii) the proposed assignee and its owners and employees undergo such trainin
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Bombs Away Franchising can impose conditions when a franchisee seeks to transfer their franchise. The FDD states that the franchisee must provide at least 60 days' notice before any proposed transfer and must obtain Bombs Away Franchising's consent.
Bombs Away Franchising may impose several conditions when granting consent for a transfer. These conditions include receiving a transfer fee of $7,500, plus any broker fees and out-of-pocket costs incurred by Bombs Away Franchising. The proposed assignee must also complete Bombs Away Franchising's franchise application process, meet the then-current standards for new franchisees, and be approved by Bombs Away Franchising. Additionally, the proposed assignee must not be a competitor.
Further conditions include the proposed assignee executing Bombs Away Franchising's current franchise agreement form, which may contain materially different provisions, although they will not be required to pay an initial franchise fee. All owners of the proposed assignee must provide a guaranty, and the franchisee must have paid all monetary obligations to Bombs Away Franchising, its affiliates, and any lessor, vendor, supplier, or lender to the business, and not be in default or breach of any agreement. The proposed assignee, its owners, and employees must also undergo any training that Bombs Away Franchising requires, and both the franchisee and the transferee must execute a general release of Bombs Away Franchising in a form satisfactory to Bombs Away Franchising. Finally, the business must fully comply with all of Bombs Away Franchising's most recent System Standards.