Must all Bombs Away sales be made to customers within the franchisee's territory?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
erate a Bombs Away business in the Territory for the entire term of this Agreement.
2.2 Protected Territory.
- (a) Limitation. Franchisee shall not solicit or market to potential customers outside of the Territory, except for solicitations or marketing which are primarily targeted inside the Territory and which incidentally reach potential customers outside of the Territory.
- (b) Service. Franchisee shall not serve customers outside of the Territory without Bombs Away Franchising's prior written permission. Bombs Away Franchising may withdraw permission at any time. If Franchisee serves a customer outside of the Territory without Bombs Away Franchising's prior written permission, Bombs Away Franchising may impose a fee equal to the greater of (i) $500 or (ii) 75% of the amount paid by such customer to Franchisee. This fee is a reasonable estimate of Bombs Away Franchising's internal cost of personnel time attributable to addressing Franchisee's breach of this Section, and it is not a penalty or estimate of all damages arising from Franchisee's breach. This fee is in addition to all of Bombs Away Franchising's other rights and remedies.
- (c) Exclusivity. Bombs Away Franchising shall not establish, nor license the establishment of, another business within the Territory or which serves customers located in the Territory selling the same or similar goods or services under the same or similar trademarks or service marks as a Bombs Away business. However, Bombs Away Franchising retains the right to:
- (i) serve (or authorize other franchisees to serve) customers in the Territory if Franchisee is in default, or if Franchisee is incapable of meeting customer demand in the Territory (in Bombs Away Franchising's reasonable opinion);
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD pages 27–28)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees are generally restricted from actively pursuing customers outside their designated territory. Specifically, franchisees cannot solicit or market to potential customers outside of their territory, except for solicitations or marketing which are primarily targeted inside the territory and which incidentally reach potential customers outside of the territory. Furthermore, franchisees are prohibited from serving customers outside of their territory without obtaining prior written permission from Bombs Away Franchising, which Bombs Away can withdraw at any time.
If a Bombs Away franchisee serves a customer outside their territory without the required permission, Bombs Away Franchising may impose a fee. This fee is the greater of $500 or 75% of the amount paid by the customer to the franchisee. This fee is considered a reasonable estimate of Bombs Away Franchising's internal costs associated with addressing the franchisee's breach of the agreement and is in addition to any other remedies Bombs Away Franchising may pursue.
However, Bombs Away Franchising retains certain rights regarding customers within a franchisee's territory. Bombs Away Franchising will not serve customers in your territory, nor authorize another party to serve customers in your territory, under our Bombs Away brand. However, Bombs Away may serve (or authorize other franchisees to serve) customers in your territory if you are in default, or if you are incapable of meeting customer demand in your territory. Bombs Away may also serve (or authorize another franchisee to serve) a particular customer in your territory if you fail to properly serve such customer, or if we reasonably believe that you will not properly serve such customer. They also reserve the right to use other channels of distribution, such as the internet, to make sales within the territory, provided they are for different products or services or use different trademarks. These stipulations highlight the importance of adhering to the territorial restrictions and service standards set by Bombs Away Franchising to avoid penalties and potential overlap in service provision.