What is the geographic scope of the Afuri Ramen Dumpling non-compete agreement?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
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 Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, the non-compete agreement applies both during the term of the franchise agreement and for a period of two years after the agreement's termination, expiration, or transfer. This agreement restricts the franchisee and related parties from participating in businesses that offer ramen, other Japanese-style cuisine, Vietnamese pho, or any business offering similar products or services to the Afuri Ramen Dumpling System.
The geographic scope of the non-compete includes several layers of restriction. First, it applies within the franchisee's specific Franchise Territory. Second, it extends to a 50-mile radius around that Franchise Territory. Third, the non-compete also covers a 50-mile radius around any location where Afuri Ramen Dumpling operates or has granted a franchise. Finally, the broadest restriction is that the non-compete applies throughout the entire United States of America.
This multi-layered geographic restriction means that a franchisee is significantly limited in their ability to engage in competitive businesses, not only in their immediate area but also in other regions where Afuri Ramen Dumpling has a presence. The inclusion of the entire United States in the non-compete scope is particularly noteworthy, as it could prevent a former franchisee from operating a similar business anywhere in the country, regardless of how far it is from their original franchise location or other Afuri Ramen Dumpling locations.
However, there is a potential exception. If a franchisee operated an existing restaurant with similar food items before entering into the Afuri Ramen Dumpling agreement, the Pre-Existing Business Addendum (Exhibit 4) might provide certain exceptions to the non-compete obligations. A prospective franchisee should carefully review this addendum and discuss any potential conflicts with the franchisor before signing the agreement.