Under what circumstances might Afuri Ramen Dumpling waive the covenant against competing businesses?
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
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling FDD, the franchisor may provide exceptions to the non-competition covenants if the franchisee operates pre-existing businesses that offer similar food items. This exception is formalized through a Pre-Existing Business Addendum to the Franchise Agreement.
Specifically, the franchisee (or its owners or affiliated entities) may continue to operate these pre-existing businesses, notwithstanding the in-term and post-term non-competition covenants detailed in Sections 5.7.2 and 6.7 of the Franchise Agreement. This allowance can extend to the existing locations of the pre-existing businesses, and potentially include any new or additional locations under the same brand name(s) and offering the same goods and services.
However, it's important to note that while the non-competition covenants may be waived under this addendum, the confidentiality and non-disclosure covenants of the Franchise Agreement remain fully in effect. This means that even if a franchisee is allowed to operate a competing business, they are still obligated to protect Afuri Ramen Dumpling's confidential information and trade secrets.