Can Afuri Ramen Dumpling deny a transfer to one of its competitors?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
6.7 You and Your Owners Not to Compete on Expiration, Termination or Transfer of Agreement.
- 6.7.1 Post-Termination Non-Compete.
This covenant will apply for two years after termination, expiration or transfer of this Agreement.
In express consideration for this Agreement, you will assure that you and your owners, shareholders, partners, directors, officers, employees, and agents, and the members of their immediate families or households (who have actual knowledge of or access to the Operations Manual or System), will not directly or indirectly participate as an owner, shareholder, director, partner, officer, employee, consultant, franchisor, franchisee, distributor, advisor or agent, or serve in any other capacity in any business engaged directly or indirectly in the offer, sale, rental, internet dissemination, 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.
This covenant applies within the Franchise Territory, within a 50-mile radius of the Franchise Territory, within a 50-mile radius of any location or franchise territory where we operate or have granted the franchise to operate an Afuri business, and within the United States of America.
Certain exceptions may apply if you operate one or more existing restaurants that offer similar food items as provided in the Pre-Existing Business Addendum to this Agreement (Exhibit 4).
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, section 6.7.1 outlines a post-termination non-compete agreement that impacts the ability to transfer the franchise. This agreement applies for two years after the termination, expiration, or transfer of the Franchise Agreement.
Specifically, the franchisee, along with their owners, shareholders, partners, directors, officers, employees, and agents, including members of their immediate families or households with knowledge of the Operations Manual or System, are restricted from participating in any business engaged in offering ramen, other Japanese-style cuisine, Vietnamese pho, or any business offering products or services substantially similar to those in the Afuri Ramen Dumpling system.
This 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. However, exceptions may apply if the franchisee operates existing restaurants offering similar food items, as detailed in the Pre-Existing Business Addendum. This clause suggests that Afuri Ramen Dumpling aims to prevent franchisees from transferring their business to direct competitors or opening competing businesses shortly after leaving the franchise system, protecting its market position and proprietary information.