Does Bombs Away Franchising have the right to determine how payments received from a Bombs Away franchisee are applied?

According to Bombs Away's 2024 Franchise Disclosure Document, Bombs Away Franchising retains the right to allocate payments received from franchisees towards outstanding obligations as it sees fit. This means that Bombs Away has considerable discretion in how they apply payments, regardless of any specific designations a franchisee might attempt to make.

This provision in the franchise agreement has significant implications for franchisees. For instance, if a franchisee has multiple outstanding debts to Bombs Away Franchising, such as royalty fees, marketing fund contributions, or other charges, Bombs Away can choose to apply a payment to any of these obligations. This could include directing payments towards older, potentially disputed debts, rather than current fees the franchisee intends to pay.

For a prospective Bombs Away franchisee, this highlights the importance of maintaining good financial standing with the franchisor and understanding the full scope of their financial obligations. Franchisees need to be aware that they cannot necessarily control how their payments are applied, which could impact their ability to manage their finances and resolve disputes effectively. It is advisable to keep detailed records of all payments and outstanding balances to ensure transparency and address any discrepancies promptly. This clause is fairly standard in franchise agreements, but the implications can be significant if not carefully managed.