Can Afuri Ramen Dumpling unilaterally reduce the scope of non-compete agreements for franchisees?
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).
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
The 2024 Afuri Ramen Dumpling Franchise Disclosure Document outlines the non-compete agreement in Section 6.7.1, which applies for two years after the termination, expiration, or transfer of the agreement. This agreement prevents the franchisee, their owners, shareholders, partners, directors, officers, employees, and agents, as well as their immediate family members or households with access to the Operations Manual or System, from participating in any business involved in the offer, sale, rental, internet dissemination, or promotion of ramen, other Japanese-style cuisine, Vietnamese pho, or any business offering similar products or services to the Afuri Ramen Dumpling system.
The non-compete 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 Afuri Ramen Dumpling operates or has granted a franchise, and within the United States of America. The FDD does not explicitly state whether Afuri Ramen Dumpling can unilaterally reduce the scope of these non-compete agreements. However, it does mention that certain exceptions may apply if the franchisee operates one or more existing restaurants that offer similar food items, as detailed in the Pre-Existing Business Addendum to the Agreement (Exhibit 4).
Given the absence of a clause allowing Afuri Ramen Dumpling to unilaterally reduce the non-compete scope, it is crucial for prospective franchisees to seek clarification from the franchisor regarding any potential flexibility or negotiation in the terms of the non-compete agreement. Franchisees should inquire about the conditions under which the non-compete terms could be modified or waived, and whether there have been instances where Afuri Ramen Dumpling has adjusted the non-compete scope for existing franchisees. Understanding these aspects is essential for assessing the potential restrictions and opportunities associated with the franchise agreement.