What is the relationship between the Afuri Ramen Dumpling Franchise Agreement and the Pre-Existing Business Addendum?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
ing and effective.
- 1.6 There are no existing restrictive covenants, other than those which the Pre-Existing Business has waived, binding on Franchisee or any of its partners, owners, agents, representatives or employees that would be breached by the acquisition and operation of the obligations of Franchisee to Franchisor in the Franchise Agreement and related agreements.
- 1 Afuri Franchise Agreement: Exhibit 4 2. Exceptions to In-Term and Post-Term Non-Competition Covenants. Franchisee (or its owners or affiliated entities) may continue to operate the Pre-Existing Business(es) [Alternative #1: only
at the locations indicated above][ Alternative #2: including any new or additional locations under the same brand name(s) and offering the same goods and services as the Pre-Existing Business(es)] notwithstanding the in-term and post-term non-competition covenants in the Franchise Agreement (in Sections 5.7.2 and 6.7 of the Franchise Agreement, respectively). However, the confidentiality and nondisclosure covenants of the Franchise Agreement are not affected by this Addendum and remain in full force and effect.
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- No Other Exception. Except as expressly permitted by Section 2 above (if applicable), Franchisee will not establish any new or additional businesses or participate in any other activities that would violate the Franchise Agreement's in-term or post-term non-competition covenants referenced above.
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- Indemnification. Franchisee shall indemnify, defend and hold harmless Franchisor and its affiliates against all losses, costs, proceedings, judgments, liabilities, expenses, court costs, and reasonable fees of attorneys and other professionals arising out of or related to: (1) any breach of the representations and warranties set out in this Addendum; (2) the operation of any Pre-Existing Business; or (3) any willful or negligent act or omission of Franchisee or Franchisee's owners, directors, officers, employees or agents (or those of any Pre-Existing Business). This indemnity includes but is not limited to any act or omission that contributes to any economic damage, bodily injury, sickness, disease or death. This indemnity shall survive termination of the Franchise Agreement. This indemnity is intended to be in addition to, and does not reduce the scope of, the indemnification provisions in the Franchise Agreement.
AFURI FRANCHISE INC. Print Name: Franchisee (jointly and severally): Name of Entity: Print Name: Individuals: Print Name: 2 – Afuri Franchise Agreement: Exhibit 4
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EXHIBIT 5
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FRANCHISE AGREEMENT
ARCHITECTURAL DESIGN ALLOCATION OF RESPONSIBILITIES (Subject to Change)
The following outline allocates deliverables and responsibilities of the Franchisor, the Franchisee, and others with respect to the design of the Franchise Premises and related matters. This information is subject to change at Franchisor's discretion.
SCHEMATIC DESIGN: This phase establishes the general scope, scale and relationships among the components of the project. The primary objective is to arrive at the most promising floor plan to further develop.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, the Pre-Existing Business Addendum provides exceptions to the non-competition covenants typically found in the standard Franchise Agreement. This addendum allows a franchisee (or their owners/affiliated entities) to continue operating pre-existing businesses, even if those businesses might otherwise conflict with the non-competition terms of the Franchise Agreement. However, the confidentiality and non-disclosure covenants within the Franchise Agreement remain fully in effect, regardless of the addendum.
The Pre-Existing Business Addendum includes specific stipulations to protect Afuri Ramen Dumpling. Franchisees are restricted from establishing new businesses or engaging in activities that would violate the non-competition clauses of the Franchise Agreement, except as explicitly allowed in the addendum. This ensures that franchisees focus on growing the Afuri Ramen Dumpling business and do not divert resources or expertise to competing ventures. The addendum also requires franchisees to indemnify Afuri Ramen Dumpling against any losses, costs, or liabilities arising from breaches of representations and warranties within the addendum, the operation of the pre-existing business, or any negligent acts related to the pre-existing business.
Section 6.7 of the Afuri Ramen Dumpling Franchise Agreement outlines the non-compete obligations of the franchisee and their owners, which apply both during the term of the agreement and for a period of two years after termination, expiration, or transfer. These restrictions prevent the franchisee from participating in businesses that offer ramen, other Japanese cuisine, Vietnamese pho, or any substantially similar products or services within the Franchise Territory, a 50-mile radius of the Franchise Territory, a 50-mile radius of any Afuri location, and within the United States. However, an exception exists for franchisees who operate existing restaurants with similar food items, as detailed in the Pre-Existing Business Addendum, highlighting the addendum's role in modifying the standard non-compete terms.
In essence, the Pre-Existing Business Addendum serves as a carve-out to the standard Franchise Agreement, allowing franchisees with existing businesses to continue operating them under specific conditions. This addendum balances the franchisee's pre-existing business interests with Afuri Ramen Dumpling's need to protect its brand and market position through non-competition covenants. Franchisees need to carefully review this addendum to understand the scope of permitted activities and the associated indemnification obligations.