What monetary obligations must a Bombs Away franchisee fulfill before transferring the franchise?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
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;
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, a franchisee must meet certain monetary obligations before they can transfer their franchise. Specifically, the franchisee must have paid all monetary obligations to Bombs Away and its affiliates, as well as to any lessor, vendor, supplier, or lender to the business.
This requirement ensures that Bombs Away and related parties are not left with outstanding debts when a franchise changes hands. It protects the financial interests of the franchisor and other stakeholders by ensuring all bills are settled before the transfer is finalized. This is a fairly standard practice in franchising, as franchisors want to ensure a clean financial break and avoid potential legal or financial complications arising from unpaid debts.
In addition to settling all outstanding monetary obligations, the franchisee must not be in default or breach of the Franchise Agreement or any other obligation owed to Bombs Away or its affiliates. This encompasses a broader range of compliance issues beyond just monetary debts, ensuring the franchisee has adhered to all contractual terms and operational standards. Bombs Away also receives a transfer fee of $7,500, plus any broker fees and other out-of-pocket costs incurred by Bombs Away.
Prospective franchisees should be aware of these requirements, as they will need to ensure all debts are cleared and they are in full compliance with the franchise agreement before attempting to transfer their franchise. Failure to meet these obligations could delay or prevent the transfer, potentially impacting the franchisee's ability to sell the business.