Freedom Boat Club Franchise

Financing Details

Freedom Boat Club does not offer direct financing. However, its parent company, Brunswick Corporation, through a joint venture called Brunswick Acceptance Company, LLC (BAC), may offer customized financing for franchisees to purchase boat inventory. This financing can cover up to 100% of the original invoice price of each boat. The interest rate can be up to 18% per annum, typically based on a benchmark like the 30-Day Average SOFR or the Prime Rate, adjusted by BAC. There are no prepayment penalties. As security, BAC may require a perfected priority security interest in each financed boat and all other assets of the franchisee, along with personal guarantees from owners. In case of default, BAC has rights as a secured party under the UCC, including the acceleration of all amounts owed.

Litigation Summary

Freedom Boat Club has disclosed three litigation cases that were resolved in 2019. The main case was filed in March 2018 by a former franchisee, FBC Marine Group, LLC, against Freedom Franchise Systems, LLC and its affiliates. This lawsuit alleged various claims including deceptive and unfair trade, Florida Franchise Act violations, fraudulent inducement, and negligent misrepresentation, following the termination of the franchisee's agreements due to non-performance. This central case consolidated two prior lawsuits: one initiated by Baja Marine, LLC against Freedom Franchise Systems, LLC, and another by Freedom Franchise Systems, LLC against FBC Marine Group, LLC and William Gates for trademark misuse. All three cases were dismissed with prejudice in January 2019 after a mediated settlement agreement. Freedom Franchise Systems, LLC and its affiliates paid a total of $700,000. Of this amount, $50,000 covered the litigation, $1,000 was for confidentiality and non-disparagement, and $1,000 for releases. The remaining $648,000 was allocated for the buyout of certain purchase option rights held by FBC Marine Group, LLC and its owners.

Renewal Conditions

To renew their franchise agreement, Freedom Boat Club franchisees must meet several conditions: they must not be in default of their franchise agreement or any other agreement with the franchisor, and they must have received satisfactory inspection reports during the initial term. Franchisees must provide written notice of their intent to renew at least six months before the agreement expires. Before the term ends, they must also sign the then-current successor franchise agreement and any related documents (which might have different terms, including higher fees), sign a general release of claims against Freedom Boat Club and its affiliates, complete any required capital improvements to meet current brand standards, and undergo any additional training. Additionally, franchisees must achieve a minimum Gross Revenue of $500,000 during the final 12 months of their term and pay a successor franchisee fee, which is 25% of the current Initial Franchise Fee or $15,000 if new franchises are not being offered. The right to renew is also contingent on the franchisee's ability to continue operating at their current location or relocate within their protected territory.

Staffing Notes

Freedom Boat Club requires its franchisees to be solely responsible for all hiring and employment decisions for their FBC Business, including establishing remuneration and complying with wage and hour requirements. Franchisees must ensure all personnel maintain high standards of decorum and demeanor. All employees with managerial, supervisory, or confidential information access must sign a confidentiality agreement. The typical office space is designed to accommodate up to three office personnel.