Under what conditions can Afuri Ramen Dumpling cancel or reduce my territory?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
Your rights to the Territory do not depend on you achieving a specific level of sales, market penetration or other condition. However, if you do not comply with the Franchise Agreement and do not cure defaults as required therein, then we may cancel or reduce your Territory or terminate the Agreement.
If you sign the Multiple Franchise Purchase Addendum to purchase multiple Franchises simultaneously, then we will designate a Development Area in which you will open your Franchises.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
However, 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 such agreement, and except as provided in the paragraphs under the heading "Our Use of the Marks and Afuri Products and Services" below. Therefore, your Development Area will be protected but not exclusive.
The Addendum will expire at the earlier of the following: (1) the opening of your last Franchise under your Development Schedule (described in the Multiple Franchise Purchase Addendum); or (2) the termination of the Addendum under to the terms and conditions of the Addendum or the Franchise Agreement. If you do not comply with the Development Schedule, we will have the right to reduce the size of (or change) your Development Area or terminate the Addendum and any of your Franchise Agreements representing Franchises that have not yet opened for business. Thereafter, we and our affiliates will have the right to operate or grant to others the right to operate outlets within your former Development Area. However, your Franchise Territory (defined above) for each of your operating Franchises will remain in force.
Source: Item 12 — Territory (FDD pages 34–37)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, your territory rights are contingent upon compliance with the Franchise Agreement. Specifically, Afuri Ramen Dumpling may cancel or reduce your territory if you fail to comply with the Franchise Agreement and do not correct any defaults as required within the agreement. This means that maintaining your territory depends on adhering to all the terms and conditions outlined in the Franchise Agreement.
For franchisees who sign a Multiple Franchise Purchase Addendum to develop multiple locations, Afuri Ramen Dumpling designates a Development Area. However, if the franchisee fails to comply with the Development Schedule outlined in the addendum, Afuri Ramen Dumpling reserves the right to reduce the size of or change the Development Area. They can also terminate the addendum and any Franchise Agreements for locations that have not yet opened. Following such a reduction or termination, Afuri Ramen Dumpling and its affiliates have the right to operate or grant others the right to operate outlets within the franchisee's former Development Area. It is important to note that even if the Development Area is reduced or terminated, the Franchise Territory for each operating franchise will remain in force.
It is important to note that while franchisees receive a protected territory, it is not exclusive. Franchisees may face competition from other franchisees, company-owned outlets, other distribution channels, or competitive brands controlled by Afuri Ramen Dumpling. However, Afuri Ramen Dumpling states that they will not establish or allow others to establish an Afuri restaurant physically located within the franchisee's Development Area using their Marks and System, as long as the Franchise Agreements and Multiple Franchise Purchase Addenda are in force and the franchisee is not in material default of the agreement.