What is the relationship between the Guarantor and the Franchisee in the Bombs Away franchise agreement?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
od for claims under the Act, rights or remedies under the Act such as a right to a jury trial may not be enforceable.
Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
BOMBS AWAY FRANCHISING, LLC Agreed to by:
Attachment 2 to Franchise Agreement
GUARANTY AND NON-COMPETE AGREEMENT
This Guaranty and Non-Compete Agreement (this "Guaranty") is executed by the undersigned person(s) (each, a "Guarantor") in favor of Bombs Away Franchising, LLC, a Wyoming Limited Liability Company ("Bombs Away Franchising").
Background Statement: _______________________ ("Franchisee") desires to enter into a Franchise Agreement with Bombs Away Franchising for the franchise of a Bombs Away business (the "Franchise Agreement"; capitalized terms used but not defined in this Guaranty have the meanings given in the Franchise Agreement). Guarantor owns an equity interest in Franchisee. Guarantor is executing this Guaranty in order to induce Bombs Away Franchising to enter into the Franchise Agreement.
Guarantor agrees as follows:
- 1. Guaranty. Guarantor hereby unconditionally guarantees to Bombs Away Franchising and its successors and assigns that Franchisee shall pay and perform every undertaking, agreement and covenant set forth in the Franchise Agreement and further guarantees every other liability and obligation of Franchisee to Bombs Away Franchising, whether or not contained in the Franchise Agreement. Guarantor shall render any payment or performance required under the Franchise Agreement or any other agreement between Franchisee and Bombs Away Franchising upon demand from Bombs Away Franchising. Guarantor waives (a) acceptance and notice of acceptance by Bombs Away Franchising of this Guaranty; (b) notice of demand for payment of any indebtedness or nonperformance of any obligations of Franchisee; (c) protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed; (d) any right Guarantor may have to require that an action be brought against Franchisee or any other person or entity as a condition of liability hereunder; (e) all rights to payments and claims for reimbursement or subrogation which any of the undersigned may have against Franchisee arising as a result of the execution of and performance under this Guaranty by the undersigned; (f) any law which requires that Bombs Away Franchising make demand upon, assert claims against or collect from Franchisee or any other person or entity (including any other guarantor), foreclose any security interest, sell collateral, exhaust any remedies or take any other action against Franchisee or any other person or entity (including any other guarantor) prior to making any demand upon, collecting from or taking any action against the undersigned with respect to this Guaranty; and (g) any and all other notices and legal or equitable defenses to which Guarantor may be entitled.
- 2. Confidential Information. With respect to all Confidential Information Guarantor shall (a) adhere to all security procedures prescribed by Bombs Away Franchising for maintaining confidentiality, (b) disclose such information to its employees only to the extent necessary for the operation of the Business; (c) not use any such information in any other business or in any manner not specifically authorized or approved in writing by Bombs Away Franchising, (d) exercise the highest degree of diligence and make every effort to maintain the confidentiality of all such information during and after the term of the Franchise Agreement, (e) not copy or otherwise reproduce any Confidential Information, and (f) promptly report any unauthorized disclosure or
use of Confidential Information. Guarantor acknowledges that all Confidential Information is owned by Bombs Away Franchising or its affiliates (except for Confidential Information which Bombs Away Franchising licenses from another person or entity). Guarantor acknowledges that all customer data generated or obtained by Guarantor is Confidential Information belonging to Bombs Away Franchising. This Section will survive the termination or expiration of the Franchise Agreement indefinitely.
3. Covenants Not to Compete.
- (a) Restriction In Term. During the term of the Franchise Agreement, Guarantor shall not 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.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the Guarantor plays a crucial role in ensuring the Franchisee meets their obligations to Bombs Away Franchising. The Guarantor, who owns an equity interest in the Franchisee, unconditionally guarantees that the Franchisee will fulfill every commitment outlined in the Franchise Agreement, as well as any other liabilities or obligations the Franchisee owes to Bombs Away Franchising. This guarantee is put in place to encourage Bombs Away Franchising to enter into the Franchise Agreement with the Franchisee.
The Guarantor is obligated to make any payment or provide any performance required of the Franchisee under the Franchise Agreement or any other agreement with Bombs Away Franchising, should Bombs Away Franchising demand it. The Guarantor also agrees to several waivers, including waiving the right to require Bombs Away Franchising to first pursue action against the Franchisee before seeking fulfillment from the Guarantor. This means Bombs Away Franchising can directly seek payment or performance from the Guarantor without initially targeting the Franchisee.
Furthermore, the Guarantor is bound by confidentiality and non-compete obligations. They must adhere to Bombs Away Franchising's security procedures for maintaining confidentiality, disclose confidential information only to employees as necessary for business operation, and avoid using such information in any unauthorized manner. During the term of the Franchise Agreement, the Guarantor cannot have any ownership interest in, lend money to, provide services to, or be employed by any competitor. This non-compete obligation extends for two years after the Franchise Agreement expires or is terminated, preventing the Guarantor from engaging with any competitor within the Franchisee's territory or the territory of any other Bombs Away business.
In essence, the Guarantor acts as a security measure for Bombs Away, ensuring financial and operational commitments are met, while also being bound by confidentiality and non-compete agreements to protect Bombs Away's interests. Prospective franchisees should carefully consider the implications of having a guarantor, as it places significant responsibility and potential liability on that party.