After the Afuri Ramen Dumpling franchise is terminated or expires, what is the duration of the non-competition covenant?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement ("FA") | Summary |
|---|---|---|
| r. Non-Competition Covenants After the Franchise is Terminated or Expires | FA Sections 5.9 & 6.8 | No competition is allowed for two years within the Territory, within a 50-mile radius of the Territory, and within a 50-mile radius of any location where we operate or have granted the franchise to operate an Afuri business. 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 the |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 40–45)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-competition covenant. This covenant restricts the franchisee from engaging in competitive activities for a period of two years.
The non-compete applies within the defined territory of the franchise, a 50-mile radius surrounding that territory, and also within a 50-mile radius of any location where Afuri Ramen Dumpling operates or has granted a franchise. This means that after the franchise agreement ends, the former franchisee cannot open a similar restaurant or business within these specified areas for the two-year duration.
However, there are exceptions to this non-competition covenant. If the franchisee operates one or more existing restaurants that offer similar food items, as outlined in the Pre-Existing Business Addendum to the Franchise Agreement (Exhibit 4), these exceptions may apply. It is important for prospective franchisees to carefully review this addendum to understand the scope and limitations of the non-competition agreement, especially if they have pre-existing restaurant businesses.