Does the Michigan Franchise Investment Law apply to all Bombs Away franchise transactions?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
(THE FOLLOWING APPLIES TO TRANSACTIONS GOVERNED BY THE MICHIGAN FRANCHISE INVESTMENT LAW ONLY)
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (a) A prohibition on the right of a franchisee to join an association of franchisees.
- (b) A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protection provided in this act. This shall not preclude a franchisee, after entering into a franchise agreement, from settling any and all claims.
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause.
Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
- (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the Michigan Franchise Investment Law does not apply to all franchise transactions, but only to those governed by it. The FDD includes a specific section titled "(THE FOLLOWING APPLIES TO TRANSACTIONS GOVERNED BY THE MICHIGAN FRANCHISE INVESTMENT LAW ONLY)". This indicates that the subsequent provisions regarding unfair provisions in franchise documents are only applicable if the Michigan Franchise Investment Law governs the transaction.
Several provisions are considered void and unenforceable if they are included in any documents related to a Bombs Away franchise and are governed by the Michigan Franchise Investment Law. These include prohibitions on a franchisee's right to join an association of franchisees, requirements for franchisees to assent to releases or waivers that deprive them of rights under the act, and provisions that allow Bombs Away to terminate or refuse to renew a franchise without good cause or fair compensation.
Additionally, the Michigan Franchise Investment Law addresses specific scenarios related to the transfer of a franchise, the franchisee's obligations, and the franchisor's financial stability. For instance, it outlines conditions under which a franchisor can refuse a transfer and addresses provisions that require a franchisee to resell items not uniquely identified with the franchisor. It also allows a franchisee to request an escrow of initial investment funds if Bombs Away's unaudited financial statements show a net worth of less than $100,000, providing a level of financial protection to the franchisee. Prospective franchisees should carefully review these stipulations to understand their rights and protections under Michigan law.