What is the status of Bombs Away's franchise offering in California as of the issuance date of this FDD?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
NVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE OFFERING CIRCULAR.
OUR WEBSITE, www.getbombsaway.comm, HAS NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATYION. ANY COMPLAINTS CONCERNING THE CONTENT OF THIS WEBSITE MAY BE DIRECTED TO THE CALIFORNIA DEPARTMENT OF FINNANCIAL PROTECTION AND INNOVATION AT www.dfpi.ca.gov.
The registration of this franchise offering by the California Department of Financial Protection and Innovation does not constitute approval, recommendation, or endorsement by the commissioner.
ALL THE OWNERS OF THE FRANCHISE WILL BE REQUIRED TO EXECUTE PERSONAL GUARANTEES. THIS REQUIREMENT PLACES THE MARITAL ASSETS OF THE SPOUSES DOMICILED IN COMMUNITY PROPERTY STATES – ARIZONA, CALIFORNIA, IDAHO, LOUISIANA, NEVADA, NEW MEXICO, TEXAS, WASHINGTON AND WISCONSIN AT RISK IF YOUR FRANCHISE FAILS.
- The following paragraph is added to the end of Item 3 of the Disclosure Document:
Neither franchisor nor any person or franchise broker in Item 2 of this disclosure document is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in that association or exchange.
- The following paragraph is added to the end of Item 6 of the Disclosure Document:
With respect to the Late Fee described in Item 6, this Item is amended to disclose that the maximum rate of interest permitted under California law is 10%.
- The following paragraphs are added at the end of Item 17 of the Disclosure Document:
The Franchise Agreement requires franchisee to sign a general release of claims upon renewal or transfer of the Franchise Agreement. California Corporations Code Section 31512 provides that any condition, stipulation or provision purporting to bind any person acquiring a franchise to waive compliance with any provision of that law or any rule or order thereunder is void.
California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer, or non-renewal of a franchise. If the Franchise Agreement contains a provision that is inconsistent with the law, the law will control.
The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).
The Franchise Agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.
The Franchise Agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to the 2024 Bombs Away Franchise Disclosure Document, the franchise is registered in California, but this registration does not constitute approval, recommendation, or endorsement by the California Department of Financial Protection and Innovation. The FDD stipulates that California law applies to the Franchise Agreement, though this may not always be enforceable. Additionally, any condition requiring a franchisee to waive compliance with state franchise law is void.
California franchisees receive added protection under state law regarding termination, transfer, or non-renewal of a franchise, superseding any conflicting terms in the Franchise Agreement. The FDD notes that Bombs Away is subject to a fee deferral condition imposed by the California Department of Financial Protection, meaning Bombs Away must defer collecting initial franchise fees from California franchisees until all pre-opening obligations are met and the franchise is open for business.
Furthermore, the FDD highlights that all owners of the franchise will be required to execute personal guarantees, which places the marital assets of spouses domiciled in California (a community property state) at risk if the franchise fails. The FDD also mentions that the maximum rate of interest permitted under California law is 10% with respect to late fees. These addenda to the standard franchise agreement provide additional legal context for prospective franchisees in California.