What are the consequences if a manager of an Afuri Ramen Dumpling franchise violates the non-competition provisions?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
ent are not affected by this Addendum and remain in full force and effect.
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- No Other Exception. Except as expressly permitted by Section 2 above (if applicable), Franchisee will not establish any new or additional businesses or participate in any other activities that would violate the Franchise Agreement's in-term or post-term non-competition covenants referenced above.
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- Indemnification. Franchisee shall indemnify, defend and hold harmless Franchisor and its affiliates against all losses, costs, proceedings, judgments, liabilities, expenses, court costs, and reasonable fees of attorneys and other professionals arising out of or related to: (1) any breach of the representations and warranties set out in this Addendum; (2) the operation of any Pre-Existing Business; or (3) any willful or negligent act or omission of Franchisee or Franchisee's owners, directors, officers, employees or agents (or those of any Pre-Existing Business). This indemnity includes but is not limited to any act or omission that contributes to any economic damage, bodily injury, sickness, disease or death. This indemnity shall survive termination of the Franchise Agreement. This indemnity is intended to be in addition to, and does not reduce the scope of, the indemnification provisions in the Franchise Agreement.
AFURI FRANCHISE INC.
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 Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, if a manager violates the non-competition covenant, the franchisee is obligated to indemnify Afuri Ramen Dumpling and its affiliates. This means the franchisee must protect Afuri Ramen Dumpling from any losses, costs, legal proceedings, judgments, liabilities, expenses, court costs, and attorney fees that arise from the manager's violation. This responsibility extends to any actions, whether intentional or due to negligence, by the franchisee's owners, directors, officers, employees, or agents that lead to economic damage, injury, sickness, or death.
The indemnification requirement remains in effect even after the franchise agreement is terminated. This provision supplements, rather than replaces, the standard indemnification clauses found in the franchise agreement. Therefore, a franchisee could face significant financial repercussions due to a manager's breach of the non-competition agreement.
Furthermore, the manager is bound by a non-competition covenant during their association with the franchisee and for two years afterward. This prevents them from participating in any business that offers ramen, other Japanese cuisine, Vietnamese pho, or any products or services substantially similar to those offered by the Afuri Ramen Dumpling system. This restriction applies whether the manager acts directly or indirectly through another person or entity, and covers various roles such as owner, director, officer, employee, consultant, or agent.