What happens if a Bombs Away franchisee does not meet the transfer requirements?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
y Bombs Away Franchising.** Bombs Away Franchising may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and Bombs Away Franchising may undergo a change in ownership and/or control, without the consent of Franchisee.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Bombs Away Franchising entered into this Agreement in reliance on Franchisee'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)
The 2024 Bombs Away Franchise Disclosure Document outlines specific requirements a franchisee must meet to transfer their franchise. Bombs Away's consent is required for any transfer, and the franchisor may impose conditions. These conditions include paying a transfer fee of $7,500 plus any broker fees and out-of-pocket costs incurred by Bombs Away. The proposed assignee must also complete Bombs Away's franchise application process, meet the then-applicable standards for new franchisees, and be approved by Bombs Away as a franchisee. The assignee cannot be a competitor.
Additionally, the proposed assignee must execute Bombs Away's current form of franchise agreement, which may contain materially different provisions, although they won't be required to pay an initial franchise fee. All owners of the proposed assignee must provide a guaranty. The franchisee must have paid all monetary obligations to Bombs Away and its affiliates, as well as to 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 undergo any required training, and all parties must execute a general release of Bombs Away. Finally, the business must fully comply with Bombs Away's most recent System Standards.
The FDD does not explicitly state the consequences if a franchisee fails to meet these transfer requirements. However, it is implied that Bombs Away can withhold consent for the transfer if the franchisee does not meet the requirements. Without Bombs Away's consent, the franchisee would not be able to transfer the franchise.
A prospective franchisee should ask Bombs Away's franchisor to clarify the specific actions or penalties Bombs Away might take if a franchisee attempts to transfer their franchise without meeting all the stipulated requirements. This could include preventing the transfer, declaring a breach of contract, or other legal remedies.