If I transfer my Afuri Ramen Dumpling franchise, what obligations do I retain?
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).
- 6.7.2 Your Acknowledgments.
You acknowledge and confirm that the time, content and geographical restrictions contained in this Section are fair and reasonable.
They are not the result of overreaching, duress, or coercion of any kind by us.
You further acknowledge and confirm that your observance of the covenants contained in this Agreement will not cause you any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained in this Agreement will not impair your ability to obtain employment commensurate with your abilities and on terms fully acceptable to you, or otherwise to obtain income required for the comfortable support of your family and the satisfaction of your creditors.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling FDD, even after transferring your franchise, you and your owners are subject to a post-termination non-compete agreement for two years. This agreement prevents you from participating in businesses that offer ramen, other Japanese-style cuisine, Vietnamese pho, or any products or services substantially similar to those in the Afuri Ramen Dumpling system.
The non-compete restrictions apply within your original franchise territory, a 50-mile radius of that territory, a 50-mile radius of any location where Afuri Ramen Dumpling operates or has granted a franchise, and throughout the United States. This broad scope means that even after selling your franchise, your ability to engage in similar food service businesses is significantly limited.
The FDD states that by agreeing to these terms, you acknowledge that the time, content, and geographical restrictions are fair and reasonable and are not the result of any overreaching or coercion by Afuri Ramen Dumpling. You also acknowledge that adhering to these covenants will not cause you undue hardship or impair your ability to find suitable employment or income. This suggests that Afuri Ramen Dumpling believes the non-compete is not overly restrictive and will not prevent you from earning a living after the transfer.