What information must a Bombs Away franchisee provide to Bombs Away Franchising regarding a proposed transfer?
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 training as Bombs Away Franchising may require;
- (viii) Franchisee, its Owners, and the transferee and its owners execute a general release of Bombs Away Franchising in a form satisfactory to Bombs Away Franchising; and
- (ix) the Business fully complies with all of Bombs Away Franchising's most recent System Standards.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, a franchisee seeking to transfer their franchise must provide Bombs Away Franchising with at least 60 days prior notice. This advance notice allows Bombs Away to assess the proposed transfer and the potential transferee.
Specifically, Bombs Away requires the franchisee to provide a copy of the terms and conditions of any transfer, except in certain situations such as a transfer for convenience of ownership, to a co-owner, or to a family member. This allows Bombs Away to exercise its right of first refusal, where it can choose to purchase the assets of the franchise under the same terms offered to the proposed transferee. Bombs Away has 30 days from receipt of the transfer terms to exercise this right.
Additionally, if the franchisee is transferring the agreement to a corporation or limited liability company for convenience of ownership, they must provide the information required by Section 2.3 of the agreement, copies of the entity's charter documents, by-laws (or operating agreement) if requested, and a guaranty in accordance with Section 2.5. The franchisee must also own all voting securities of the corporation or limited liability company. These requirements ensure that Bombs Away maintains control over who operates its franchises and that the financial obligations are secured.
Overall, these stipulations enable Bombs Away to maintain standards and protect the brand by carefully vetting potential new franchisees and ensuring financial stability during and after the transfer process. Franchisees should be aware of these requirements and the associated costs, such as the $7,500 transfer fee, when considering a transfer.