In Virginia, what constitutes 'reasonable cause' for Bombs Away to cancel a franchise agreement?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
In the Commonwealth of Virginia only, this Disclosure Document is amended as follows:
The following statements are added to Item 17(h):
Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement do not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the definition of 'reasonable cause' for franchise cancellation in Virginia is determined by the Virginia Retail Franchising Act. The FDD specifies that it is illegal for Bombs Away to cancel a franchise without reasonable cause, as defined within the Act or other Virginia laws. If any clause in the Franchise Agreement allows termination but does not meet the legal standard of 'reasonable cause' under Virginia law, that clause may not be enforceable.
This means that a Bombs Away franchisee in Virginia has some protection against arbitrary termination. The franchisor cannot simply rely on the standard termination clauses in the franchise agreement if those clauses do not align with Virginia's legal definition of 'reasonable cause'. This protection is provided by Section 13.1-564 of the Virginia Retail Franchising Act.
It is important for a prospective Bombs Away franchisee in Virginia to understand the specific definition of 'reasonable cause' as defined in the Virginia Retail Franchising Act. Since the FDD does not provide the specific definition, the franchisee should seek legal counsel to fully understand their rights and protections under Virginia law. They should also carefully review the franchise agreement to identify any clauses that might conflict with the Act.