If Bombs Away Franchising cures a default, does it have liability to the franchisee?
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 under any provision of the agreement, Bombs Away has the option to take action to cure the default on behalf of the franchisee. Importantly, Bombs Away assumes no liability to the franchisee when curing a default.
However, if Bombs Away chooses to cure a default, the franchisee is responsible for reimbursing Bombs Away for all costs and expenses incurred, including internal costs, plus an additional 10% administrative fee. This means that while Bombs Away is not liable to the franchisee for actions taken to cure the default, the franchisee will bear the financial burden of the cure, including the administrative fee.
This clause provides Bombs Away with the flexibility to intervene and protect its brand and system standards without exposing itself to liability. However, it also places the financial risk of any cure on the franchisee, even if the franchisee did not request or agree with the specific actions taken by Bombs Away. Prospective franchisees should carefully consider this provision and understand the potential costs associated with Bombs Away curing a default on their behalf.