What is the maximum duration of a non-compete covenant required by Bombs Away after termination or non-renewal?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
erm. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor operating in any of Franchisee's Territory or
the territory of any other Bombs Away business operating on the date of termination or transfer, as applicable.
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any court or arbitrator, then the parties intend that the court or arbitrator modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Bombs Away Franchising. Franchisee agrees that the existence of any claim it may have against Bombs Away Franchising shall not constitute a defense to the enforcement by Bombs Away Franchising of the covenants of this Section.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees are subject to a non-compete covenant for a period of two years after the franchise agreement expires or is terminated for any reason. This restriction also applies for two years after a transfer, if applicable.
The non-compete restricts the franchisee (or any 'Restricted Party') from having any ownership interest in, lending money or providing financial assistance to, providing any services to, or being employed by, any competitor. This restriction applies to competitors operating within the franchisee's territory or the territory of any other Bombs Away business operating on the date of termination or transfer.
It's important to note that if the franchisee fails to comply with these non-compete obligations during the restrictive period, the period will be extended by an additional day for each day of noncompliance. This could potentially extend the non-compete beyond the initial two-year period. Franchisees should carefully consider these restrictions and their potential impact on their future business activities.