Can Afuri Ramen Dumpling refuse a transfer to a competitor?
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)
Based on the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, the franchise agreement contains a post-termination non-compete clause that could impact a transfer to a competitor.
Specifically, for two years after the transfer of the agreement, the franchisee, their owners, shareholders, partners, directors, officers, employees, and agents, along with their immediate family members or households with knowledge of the Operations Manual or System, are restricted from participating in any business engaged in the offer, sale, rental, internet dissemination, or promotion of ramen, other Japanese style cuisine, Vietnamese pho, or any business offering products or services essentially the same or substantially similar to those in the Afuri Ramen Dumpling System.
This non-compete clause applies within the Franchise Territory, a 50-mile radius of the Franchise Territory, 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. Certain exceptions may apply if the franchisee operates one or more existing restaurants that offer similar food items as provided in the Pre-Existing Business Addendum to the Agreement. The franchisee acknowledges that these restrictions are fair and reasonable and will not cause undue hardship.