Who is included in the definition of related parties that are subject to the non-compete restrictions for Afuri Ramen Dumpling?
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 Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, the non-compete agreement extends beyond the franchisee to include several related parties. Specifically, the agreement applies to the franchisee and their owners, shareholders, partners, directors, officers, employees, and agents. It also encompasses members of their immediate families or households who have actual knowledge of or access to the Operations Manual or System.
This broad definition means that a wide range of individuals connected to the franchisee are restricted from engaging in competitive businesses. This includes not only those directly involved in the franchise's operations but also family members with access to confidential information. The restrictions prevent these individuals from participating in businesses that offer ramen, other Japanese-style cuisine, Vietnamese pho, or any business offering substantially similar products or services to the Afuri Ramen Dumpling system.
The non-compete covenant is in effect for two years after the termination, expiration, or transfer of the Franchise Agreement. The geographical scope of this restriction includes the Franchise Territory, a 50-mile radius around it, a 50-mile radius around any location where Afuri Ramen Dumpling operates or has granted a franchise, and throughout the United States. This extensive reach underscores the importance Afuri Ramen Dumpling places on protecting its market and trade secrets.
Prospective franchisees should carefully consider the implications of these non-compete terms. It is essential to understand who is included in the definition of related parties and the extent to which their future activities may be limited. Franchisees should also evaluate whether these restrictions could pose any hardship on themselves or their families, especially if they have prior experience or interests in similar food service businesses. Consulting with a legal professional is advisable to fully grasp the scope and enforceability of these covenants.