During the term of the Bombs Away franchise, can the spouse of an owner have an ownership interest in a competitor?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or | |
|---|---|---|
| other agreement | ||
| q. Non-competition | ||
| covenants during the term | ||
| of the franchise | Neither you, any owner of the business, or | |
| any spouse of an owner may have ownership interest in, lend money or provide financial assistance to, provide services to, or be employed by, any competitor. | ||
| r. Non-competition | ||
| covenants after the | For two years, neither you, any owner of | |
| franchise is terminated or | ||
| expires | the business, or any spouse of an owner may have ownership interest in, lend money or provide financial assistance to, provide services to, or be employed by a competitor operating in your former territory or the territory of any other Bombs Away business operating on the date of termination. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 28–31)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, during the term of the franchise agreement, neither the franchisee, any owner of the business, nor any spouse of an owner is allowed to have an ownership interest in, lend money or provide financial assistance to, provide services to, or be employed by any competitor.
This non-compete clause has significant implications for prospective Bombs Away franchisees and their spouses. It means that a franchisee's spouse cannot have any financial or professional involvement with a competing business during the entire term of the Bombs Away franchise, which is 10 years according to section 3.1. This restriction extends to owning, lending money, providing services, or being employed by a competitor.
After the franchise is terminated or expires, a similar non-compete clause applies for two years. During this period, neither the franchisee, any owner, nor their spouse can have an ownership interest in, lend money or provide financial assistance to, provide services to, or be employed by a competitor operating in the former territory or the territory of any other Bombs Away business operating on the date of termination. This post-term restriction is limited to the franchisee's former territory and the territories of other Bombs Away businesses at the time of termination.
Prospective franchisees should carefully consider these restrictions and discuss them with their spouses, as they could impact their spouse's career or investment opportunities during and for two years after the franchise term. Franchisees should seek legal counsel to fully understand the scope and enforceability of these non-compete covenants under applicable state laws.