What does joint and several liability mean for Bombs Away franchisees?

According to Bombs Away's 2024 Franchise Disclosure Document, if two or more people sign the Franchise Agreement as 'Franchisee,' they will have joint and several liability. This is also applicable to the Guaranty if multiple guarantors sign it. In practical terms, this means that each individual signing the agreement is fully responsible for all the obligations and debts outlined in the agreement.

For a prospective Bombs Away franchisee, this has significant implications. If a franchise is co-owned or has multiple guarantors, Bombs Away can pursue any one of the individuals for the full amount of any debt or obligation, regardless of the internal agreement between the franchisees or guarantors. This means that even if one franchisee is primarily responsible for a debt, the other franchisee can be held liable for the entire amount if the first franchisee is unable to pay.

This clause protects Bombs Away by ensuring they can recover debts or enforce obligations more easily. However, it creates a substantial risk for franchisees and guarantors, as they could be held responsible for the actions or inactions of their business partners. It is crucial for potential franchisees to carefully consider the financial stability and business practices of their partners before entering into a franchise agreement with joint and several liability.

Franchisees should seek legal counsel to fully understand the implications of joint and several liability and to discuss strategies for mitigating this risk, such as establishing clear internal agreements with co-owners or obtaining appropriate insurance coverage. Understanding this liability is essential for anyone considering a Bombs Away franchise with multiple owners or guarantors.