Under what circumstances can Bombs Away modify a franchisee's territorial rights?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
exclusivity does not depend on any contingency. There are no circumstances that permit us to modify your territorial rights.
Restrictions on Us from Soliciting or Accepting Orders in Your Territory
Except as described in this paragraph, we will not serve customers in your territory, nor authorize another party to serve customers in your territory, under our Bombs Away brand. However, we 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. We 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. We reserve the right to use other channels of distribution, such as the internet, catalog sales, telemarketing, or other direct marketing sales, to make sales within your territory (i) using our principal trademarks, but only for sales of products or services different from the ones you will offer, and (ii) using trademarks different from the ones you will use. In the circumstances where the franchise agreement does not prohibit us from soliciting or accepting orders from inside your territory, we do not pay any compensation to you.
Source: Item 12 — TERRITORY (FDD pages 23–24)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, there are specific circumstances under which Bombs Away retains the right to serve customers within a franchisee's territory or authorize other franchisees to do so. These circumstances include situations where the franchisee is in default or is incapable of meeting customer demand in the territory. Additionally, Bombs Away may serve a particular customer in the territory if the franchisee fails to properly serve that customer, or if Bombs Away reasonably believes that the franchisee will not provide proper service. These stipulations are important for prospective franchisees to consider, as they define the boundaries of territorial exclusivity.
Bombs Away also reserves the right to use other channels of distribution, such as the internet, catalog sales, telemarketing, or other direct marketing sales, to make sales within a franchisee's territory. This is allowed (i) using their principal trademarks, but only for sales of products or services different from the ones the franchisee will offer, and (ii) using trademarks different from the ones the franchisee will use. This means that while Bombs Away grants a protected territory, it retains the ability to compete within that territory through alternative channels and different product offerings.
Item 12 of the FDD states that there are no circumstances that permit Bombs Away to modify a franchisee's territorial rights. However, the document also outlines the conditions under which Bombs Away can serve customers within a franchisee's territory, which effectively acts as a modification. Prospective franchisees should carefully evaluate these conditions to fully understand the scope and limitations of their territorial protection. It is essential to seek clarification from Bombs Away regarding how these provisions are applied in practice and what recourse a franchisee has if they believe Bombs Away is infringing on their territorial rights.