What happens if a Bombs Away franchisee violates Section 13.2 (non-compete)?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- (v) Franchisee or any Owner commits a material violation of Section 7.2 (compliance with laws) or Section 13.1 (confidentiality), violates Section 13.2 (non-compete) or Article 15 (transfer), or commits any other violation of this Agreement which by its nature cannot be cured;
13.2 Covenants Not to Compete.
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") shall 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.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall 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. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this 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. Franchisee agrees that the existence of any claim it 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 a Restricted Party 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 Bombs Away's 2024 Franchise Disclosure Document, violating Section 13.2, the non-compete clause, constitutes grounds for termination of the franchise agreement by Bombs Away Franchising. Specifically, if a franchisee violates Section 13.2, Bombs Away can terminate the agreement.
Additionally, the non-compete agreement extends both during the term of the agreement and for two years after the agreement expires or is terminated. This restriction applies to the franchisee, any owner, and any spouse of an owner, collectively referred to as "Restricted Parties." These parties are prohibited from having any ownership interest in, lending money or providing financial assistance to, providing any services to, or being employed by any competitor operating in the franchisee's territory or the territory of any other Bombs Away business operating on the date of termination or transfer.
Furthermore, if a Restricted Party fails to comply with the obligations under the non-compete section during the restrictive period, the restrictive period will be extended an additional day for each day of noncompliance. This means that any breach of the non-compete agreement will result in a day-for-day extension of the period during which the franchisee is restricted from engaging in competitive activities. Bombs Away also has the right to seek enforcement of these covenants in court, and the franchisee's potential claims against Bombs Away do not constitute a defense against such enforcement.