What territorial protections does Afuri Ramen Dumpling grant in the Franchise Territory?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
| 20, | between | AFURI | FRANCHISE | INC., | an | Oregon | corporation | ("we/us"), | and |
|---|---|---|---|---|---|---|---|---|---|
| and ("you"). | |||||||||
| executed [#] | 1. | Simultaneous Multiple Franchise Purchase. The parties have contemporaneously | |||||||
| Franchise Agreements, including this Addendum, as part of a multiple franchise purchase. | |||||||||
| 2. | following "Development Area": | Development Area. If the Franchise Premises has not been determined when this | |||||||
| Addendum is executed, you are responsible for selecting the site for your Franchise Premises within the | |||||||||
Subject to our reservations of rights in the Franchise Agreement, we will not establish or allow others to establish an Afuri business physically located within your Development Area using our Marks and System so long as the Franchise Agreements and corresponding Multiple Franchise Purchase Addenda are in force and you are not in default in any material provision of any such agreement. Upon termination of expiration of this Addendum (under Section 8 below), your rights with respect to the Development Area will automatically terminate.
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- Franchise Premises and Franchise Territory. The Franchise Territory for each franchise will be designated by us before you open each relevant Franchise Premises. The Franchise Territory and your Franchise Premises must be in the United States of America, legally available pursuant to state and federal franchise and business opportunity disclosure and registration laws and pursuant to our contractual commitments (including those with our other franchisees) and in compliance with our franchise placement, market development and demographic criteria.
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- No Other Understandings. Except as specifically outlined or forbidden in the relevant Franchise Agreement, there are no understandings oral or written concerning the future placement of restaurants by any party and concerning any territory protections granted to you.
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- Franchise Opening Schedule.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, franchisees receive some territorial protection, but with significant exceptions. Afuri Ramen Dumpling will not establish or allow others to establish an Afuri business physically located within a franchisee's Development Area using their Marks and System, provided the Franchise Agreements and Multiple Franchise Purchase Addenda are in force and the franchisee is not in material default of any agreement. This protection is tied to the Development Area and terminates upon the expiration or termination of the relevant addendum. The Franchise Territory for each franchise will be designated by Afuri Ramen Dumpling before the franchisee opens their relevant Franchise Premises. The Franchise Territory and Franchise Premises must be in the United States of America, legally available pursuant to state and federal franchise and business opportunity disclosure and registration laws and contractual commitments, and in compliance with Afuri Ramen Dumpling's franchise placement, market development, and demographic criteria.
However, Afuri Ramen Dumpling retains several important rights that can impact a franchisee's territory. They can use or license the Marks to anyone, for any purpose, and at any location, except they will not place an Afuri restaurant within the franchisee's Franchise Territory. Afuri Ramen Dumpling can also sell products or services anywhere, including within the Franchise Territory, using the Marks or different marks, through other distribution channels besides the franchised Afuri restaurant. Franchisees will not be compensated for any such sales made within their Franchise Territory.
Specifically, Afuri Ramen Dumpling may place Afuri establishments in locations like airport and mall food courts, stadiums, and similar limited access environments, even within a franchisee's territory. They can also sell present and future Afuri products in grocery stores and food markets at any location, regardless of whether it's within the Franchise Territory or near an Afuri franchise. Other distribution methods, such as internet sales, telephone sales, catalogue sales, and sales via online marketplaces, are also permitted. Afuri Ramen Dumpling also reserves the exclusive right to use the Internet to promote the Marks and offer and sell Afuri-related products and services. Franchisees are restricted from independent internet marketing, e-commerce, or sales via online marketplaces unless specifically allowed in the Operations Manual. These stipulations significantly limit the territorial protections offered, as Afuri Ramen Dumpling retains considerable freedom to operate and distribute its products within a franchisee's territory through alternative channels.
Prospective franchisees should carefully consider these limitations and how they might affect their potential revenue and market share. It is important to understand the specific criteria used to define the Franchise Territory and Development Area, as well as the potential for competition from other Afuri Ramen Dumpling ventures within that area. Due diligence, including a thorough review of the Operations Manual and discussions with existing franchisees, is essential to fully grasp the implications of these territorial rights and reservations.