What are the potential consequences if an Afuri Ramen Dumpling franchisee violates the non-compete agreement?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
se the Franchise Territory to another person or may operate Afuri businesses within the Franchise Territory.
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.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
Based on the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, Section 6.7.1 outlines the post-termination non-compete agreement. This agreement states that for two years after the termination, expiration, or transfer of the Franchise Agreement, 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 prohibited from participating in any business that offers ramen, other Japanese-style cuisine, Vietnamese pho, or any business offering products or services substantially similar to those of the Afuri Ramen Dumpling System.
This non-compete clause 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 Afuri Ramen Dumpling operates or has granted a franchise, and within the United States of America. The agreement specifies that this restriction is in express consideration of the Franchise Agreement, and the franchisee acknowledges that the restrictions are fair and reasonable and will not cause undue hardship.
While the FDD excerpt details the scope and duration of the non-compete agreement, it does not explicitly state the consequences of violating this agreement. It is common in franchise agreements for violations of the non-compete clause to result in legal action, including injunctions to prevent further competition and monetary damages to compensate the franchisor for losses. A prospective Afuri Ramen Dumpling franchisee should seek clarification from the franchisor regarding the specific remedies Afuri Ramen Dumpling may pursue in the event of a breach of the non-compete agreement.