What is the 'Holdover Notice' in the Bombs Away franchise agreement?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.10 Holdover. If Franchisee continues operating the Business after the expiration of the term without a renewal agreement or successor franchise agreement executed by the parties in accordance with Section 3.2, then at any time thereafter (regardless of any course of dealing by the parties), Bombs Away Franchising may by giving written notice to Franchisee (the "Holdover Notice") either (i) require Franchisee to cease operating the Business and comply with all postclosing obligations effective immediately upon giving notice or effective on such other date as Bombs Away Franchising specifies, or (ii) bind Franchisee to a renewal term of 5 years, and deem Franchisee and its Owners to have made the general release of liability described in Section 3.2(vi).
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the Holdover Notice pertains to the scenario where a franchisee continues to operate the Bombs Away business after the franchise term expires, without a formal renewal or successor agreement in place. In this situation, Bombs Away Franchising retains specific rights, exercisable through a written Holdover Notice to the franchisee.
Specifically, Bombs Away has two options upon issuing a Holdover Notice. First, Bombs Away can demand that the franchisee immediately cease operations and comply with all post-termination obligations. The cessation can be effective immediately upon the notice or on a date specified by Bombs Away Franchising. Alternatively, Bombs Away can bind the franchisee to an additional renewal term of 5 years. By doing so, the franchisee and its owners are then deemed to have provided a general release of liability to Bombs Away.
This clause carries significant implications for a Bombs Away franchisee. If a franchisee continues to operate after the term without a new agreement, Bombs Away retains considerable control. They can force immediate closure or unilaterally impose a 5-year renewal term, along with a liability release. Franchisees should, therefore, proactively manage the renewal process and avoid operating beyond the franchise term without a formal agreement to protect their interests and avoid unexpected obligations.