What agreements must all owners of an Afuri Ramen Dumpling franchise agree to be bound by?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
. Except in connection with an Afuri franchise, you will never communicate, divulge, or use in any manner, either for your benefit or the benefit or any other person, persons, partnerships, associations, companies or corporations any Confidential Information or proprietary information, knowledge or know-how concerning the System or any information we have communicated to you in written, verbal or electronic form, including intranet passwords, for the operation of your business.
- 3 COVENANT OF NON-USE. You agree not to use Confidential Information or the System, except as authorized by us. You will obligate your owners, board of directors, your employees, and your agents to the same non-use covenant. We must approve in writing any use of Confidential Information or System by you or your owners or your directors or employees.
- 4 RETURN OF CONFIDENTIAL INFORMATION. You agree that all originals and copies of records, data, reports, documents, lists, plans, drawings, correspondence, memoranda, notes, and other materials related to or containing any Confidential Information, in whatever form they exist, whether written, visual, audio, video, or other form of media, shall be our sole and exclusive property. Upon request by us, you will promptly return to us all documents or other tangible property that contains Confidential Information.
- 5 RECIPES. Without limiting the generality of the non-disclosure and non-use provisions in this Agreement, you specifically agree not to disclose or use our recipes (by yourself or by or through any other entity or individual) in any manner other than in connection with Afuri franchises pursuant to the Franchise Agreement.
6 NON-COMPETITION COVENANT.
6.1 Covenant. During the term of your association with Franchisee and for two years thereafter, you will not directly or indirectly (including by or through any other person or entity) participate as an owner, director, officer, employee, consultant, licensor, licensee, distributor, or agent, or serve in any other capacity in any business engaged in the offer, sale, or promotion of: (1) ramen, (2) other Japanese style cuisine, (3) Vietnamese pho, or (4) any business that offers products or services that are essentially the same as, or substantially similar to, the products and services that are part of the
System.
- 6.2 Geographic Scope. During the term of your association with Franchisee, the covenants described in Section 6.1 above shall apply worldwide. During the two-year period after your association with Franchisee, such covenants will apply within the Development Territory, within a 50-mile radius of the Development Territory, and within a 50-mile radius of any location or designated territory where we operate or have granted the franchise to operate an Afuri business.
- 7 NON-DIVERSION OF BUSINESS. During the term of your association with Franchisee and for two years thereafter, you will not:
- A. divert or attempt to divert any of our business or any of our customers to any competing establishment; or
- B. do anything harmful to our goodwill associated with the Marks and System.
- 8 REMEDIES: INJUNCTION AND DAMAGES. You acknowledge that any disclosure of Confidential Information will cause irreparable harm to us. You agree that it may be difficult to measure damage to us from any breach by you or your employees and agents of this Agreement.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 39–40)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling FDD, franchisees and their owners must adhere to several covenants, primarily concerning the use and protection of confidential information and non-competition. Franchisees must agree not to use Afuri Ramen Dumpling's confidential information or system, except as authorized by the company. This obligation extends to the franchisee's owners, board of directors, employees, and agents, ensuring a comprehensive safeguarding of trade secrets. Any permitted use of confidential information or the system requires explicit written approval from Afuri Ramen Dumpling. Upon request, all documents and materials containing confidential information must be promptly returned to Afuri Ramen Dumpling, reinforcing the franchisor's ownership and control over its proprietary assets.
In addition to protecting confidential information, franchisees and their owners must agree to a non-competition covenant. During the term of the franchise agreement, they are prohibited from participating in any business involved in the offer, sale, or promotion of ramen, other Japanese-style cuisine, or Vietnamese pho. This restriction also applies to businesses offering products or services substantially similar to those within the Afuri Ramen Dumpling system. This non-compete extends for two years after the termination, expiration, or transfer of the franchise agreement.
The non-compete covenant applies within the franchise territory, a 50-mile radius of the franchise territory, a 50-mile radius of any location where Afuri Ramen Dumpling operates or has granted a franchise, and within the United States. Franchisees acknowledge that these restrictions are fair and reasonable and that adhering to them will not cause undue hardship. Exceptions to the non-compete may apply if the franchisee operates existing restaurants offering similar food items, as outlined in the Pre-Existing Business Addendum to the Franchise Agreement. These measures are designed to protect Afuri Ramen Dumpling's market position and prevent franchisees from leveraging the franchisor's system and brand to compete against it, ensuring the continued success and integrity of the franchise network.
These restrictions are typical in the franchise industry, as franchisors seek to protect their brand, trade secrets, and market share. Prospective Afuri Ramen Dumpling franchisees should carefully review these covenants and consider their implications for future business activities. It is advisable to seek legal counsel to fully understand the scope and enforceability of these agreements before entering into a franchise agreement.