What information must the transferee provide to Bombs Away Franchising when an individual franchisee transfers to a corporation or LLC?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
- 15.3 Transfer for Convenience of Ownership. If Franchisee is an individual, Franchisee may Transfer this Agreement to a corporation or limited liability company formed for the convenience of ownership after at least 15 days' notice to Bombs Away Franchising, if, prior to the Transfer: (1) the transferee provides the information required by Section 2.3;
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 is an individual and wants to transfer the franchise agreement to a corporation or LLC for ownership convenience, they must provide Bombs Away Franchising with specific information and meet certain conditions. This transfer requires at least 15 days' notice to Bombs Away.
Prior to the transfer, the transferee (the corporation or LLC) must provide the information required by Section 2.3 of the franchise agreement. Section 2.3 requires the franchisee to identify each owner, officer, and director of the franchisee entity, and describe the nature and extent of each owner's interest in the franchisee. Additionally, the franchisee must provide copies of the entity's charter documents, by-laws (or operating agreement), and similar documents if Bombs Away requests them.
Furthermore, the individual franchisee must own all voting securities of the corporation or LLC. Finally, the franchisee must provide a guaranty in accordance with Section 2.5 of the franchise agreement. These requirements ensure that Bombs Away maintains control over who operates the franchise and that the financial obligations are guaranteed even after the transfer to a corporate entity.