If Bombs Away Franchising cures a default, what must the franchisee reimburse?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- 11.3 Bombs Away Franchising's Right to Cure. If Franchisee breaches or defaults under any provision of this Agreement, Bombs Away Franchising may (but has no obligation to) take any action to cure the default on behalf of Franchisee, without any liability to Franchisee.
Franchisee shall reimburse Bombs Away Franchising for its costs and expenses (including the allocation of any internal costs) for such action, plus 10% as an administrative fee.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, if a franchisee defaults on any provision of the Franchise Agreement, Bombs Away has the option to take action to correct the default without incurring any liability to the franchisee. If Bombs Away chooses to cure a default, the franchisee is obligated to reimburse Bombs Away for all costs and expenses associated with the action, including any internal costs that are allocated.
In addition to covering the costs and expenses, Bombs Away will also charge the franchisee an administrative fee equal to 10% of the total costs incurred. This means that the franchisee will not only have to pay for the direct expenses Bombs Away incurs while curing the default, but also an additional 10% on top of that amount.
This clause in the franchise agreement is fairly standard, as it protects Bombs Away's interests and ensures they are compensated for their time and resources if they step in to correct a franchisee's default. It also incentivizes franchisees to avoid defaults, as they will be responsible for covering all associated costs and an additional administrative fee. Prospective franchisees should be aware of this provision and understand the potential financial implications of defaulting on the agreement.