Does the Amorino Area Development Agreement contain a non-competition clause?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
8.4 Confidentiality and Non-Competition Agreements for Principals and Managers
Each principal and manage of Area Developer shall execute and deliver to Company a confidentiality and non-competition agreement in the form attached as Attachment C to the Franchise Agreement in this Disclosure Document, or such other form as proscribed by Company from time to time.
IX. DEFAULT AND TERMINATION
9.1 Termination Pursuant to A Material Breach of This Agreement
This Agreement may be terminated by Company for cause without notice or opportunity to cure, except for such notice as may be required by law, in the event of any material breach by Area Developer of this Agreement. Material breach, as used herein, shall specifically include, among other things, the following:
- (a) Any attempt by Area Developer to sell, assign, transfer or encumber in whole or in part any or all rights and obligations under this Agreement, in violation of the terms of this Agreement, or without the written consents required, pursuant to this Agreement.
- (b) Failure of Area Developer to meet the Minimum Development Obligations within the Development Periods set forth herein. Time is of the essence.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, the Area Development Agreement includes non-competition clauses that apply both during the term of the agreement and after its expiration or termination. During the term, Amorino will not operate or grant a franchise to anyone else within the Area Development Territory. However, Amorino retains the right to conduct other business activities, such as selling products through other channels or establishing Amorino stores outside the Area Development Territory.
After the agreement expires or terminates, the franchisee and their principals are restricted from engaging in any business that produces or sells ice cream products. This restriction applies for two years and covers the location of the former franchised business, within a three-mile radius of the store, or within a three-mile radius of any other Amorino store. These non-compete obligations can be modified by Amorino, who reserves the right to reduce the scope of these provisions at any time with immediate effect upon written notice.
Principals and managers of the Area Developer are required to sign a Confidentiality and Non-Competition Agreement. This agreement likely contains further details regarding the scope and terms of the non-competition obligations. The FDD states that a court or arbitrator may modify the non-competition provisions to ensure they are enforceable under applicable law. Additionally, Amorino can seek injunctive relief and recover legal costs if the franchisee violates the non-competition terms, highlighting the importance of adhering to these clauses.
These non-competition clauses are designed to protect Amorino's brand and market position. Prospective franchisees should carefully review these provisions and understand their implications, particularly the geographic scope and duration of the restrictions. It is also important to note the exception for ownership of less than 5% of publicly held companies, which provides some flexibility for investments in larger entities.