Are personalized materials that have no value to Bombs Away subject to compensation upon non-renewal?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation.
This subsection applies only if: (i) the term of the franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisor's intent not to renew the franchise.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to the 2024 Bombs Away Franchise Disclosure Document, Bombs Away franchisees will not be compensated for personalized materials that have no value to the franchisor upon non-renewal of the franchise agreement. Additionally, franchisees will not be compensated for inventory, supplies, equipment, fixtures, and furnishings not reasonably required for conducting the franchise business.
However, this lack of compensation is only applicable if the franchise term is less than 5 years, and the franchisee is prohibited from operating a similar business under a different trademark in the same area after the franchise expires. This also applies if the franchisee does not receive at least 6 months' advance notice of Bombs Away's intent not to renew the franchise.
This provision protects Bombs Away from having to repurchase items that are specific to a franchisee and cannot be reused or resold. It also sets conditions under which the compensation rule applies, giving franchisees some protection if they are not given adequate notice or are restricted from continuing in a similar business after the franchise term.