Does the Bombs Away Guaranty agreement specify any geographic limitations on the non-compete?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- (b) Restriction Post Term.
For two years after the Franchise Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer by Guarantor), Guarantor shall not 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 operating in any of Franchisee's Territory or the territory of any other Bombs Away business operating on the date of termination or transfer, as applicable.
- (c) Interpretation.
Guarantor agrees that each of the foregoing covenants is independent of any other covenant or provision of this Guaranty or the Franchise Agreement.
If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any court or arbitrator, then the parties intend that the court or arbitrator modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Bombs Away Franchising.
Guarantor agrees that the existence of any claim it or Franchisee may have against Bombs Away Franchising shall not constitute a defense to the enforcement by Bombs Away Franchising of the covenants of this Section.
If Guarantor fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to the 2024 Bombs Away Franchise Disclosure Document, the Guaranty and Non-Compete Agreement does include geographic limitations. Specifically, for two years after the franchise agreement expires or is terminated, the Guarantor cannot be involved with any competitor operating within the franchisee's territory or the territory of any other Bombs Away business operating at the time of termination or transfer.
This means that the non-compete obligations extend not only to the franchisee's own territory but also to the territories of other Bombs Away franchisees. This provision aims to protect Bombs Away from competition within its existing network. The restriction applies regardless of the reason for termination or expiration of the franchise agreement.
It is important for potential guarantors to understand the scope of these restrictions, as they could limit their future business activities within specific geographic areas. The guarantor should carefully consider the potential impact of these limitations before signing the Guaranty and Non-Compete Agreement. If a Guarantor fails to comply with the obligations under this section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.