Does the restriction on investing in competing businesses apply to businesses similar to proposed Amorino stores?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
Covenantor agree that during the term of Covenant's employment with and/or ownership of Franchisee (and for a two (2) year uninterrupted period following the termination or expiration of such employment and ownership for any reason), except as otherwise approved in writing by Amorino, Covenantor shall not, either directly or indirectly, for himself/herself, or through, on behalf of, or in conjunction with any person, or legal entity:
- (1) Divert or attempt to divert any present or prospective customer or supplier of the Franchised Business to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Proprietary Marks and the System.
- (2) Employ or seek to employ any person who is or has been within the previous 30 days employed by Amorino or an Affiliate of Amorino as a salaried managerial employee, or otherwise directly or indirectly induce such person to leave his or her employment.
- (3) Own, maintain, advise, operate, engage in, be employed by, make loans to, invest in, provide any assistance to, or have any interest in (as owner or otherwise) or relationship or association with, any business that engages in the production or sale at retail or wholesale of gelato or other ice cream products, and any other products or services offered by your Store or proposed to be offered by your Store or similar Amorino Stores, other than a Amorino Store operated pursuant to a then-currently effective franchise agreement with Amorino. at any location within the United States, its territories or commonwealths, or any other country, province, state or geographic area that (i) is, or is intended to be, located at the location of the former Franchised Business; (ii) within the former Protected Area of the Store (or, if there was no protected area, within a three-mile radius of the Store); or (iii) within a three-mile radius of any other Store operating under the System and Proprietary Marks in existence or under development at the time of such expiration, termination or transfer. The obligations described in this Section shall be tolled during any period of noncompliance.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, during the term of the franchise agreement, franchisees are restricted from engaging in any business that produces or sells gelato, ice cream products, or any other products or services offered by their Amorino store, proposed Amorino store, or similar Amorino stores. This restriction applies unless Amorino provides written approval or the business is an Amorino store operated under a current franchise agreement with Amorino. This non-compete clause extends to owning, maintaining, advising, operating, being employed by, making loans to, investing in, or providing assistance to such competing businesses.
This restriction is designed to protect Amorino's market position and brand integrity by preventing franchisees from directly competing with the Amorino system. The clause ensures that franchisees remain fully committed to their Amorino business and do not divert resources or knowledge to competing ventures. The restriction applies not only to the franchisee but also to any principal involved in the franchise.
After the franchise agreement expires or terminates, a similar non-compete clause remains in effect for a period of two years. During this post-term period, the franchisee is restricted from engaging in competing businesses within specific geographic areas, including the location of former stores, the former protected area, or within a three-mile radius of any other Amorino store. This extended restriction aims to prevent former franchisees from using their experience and knowledge gained from the Amorino system to unfairly compete with existing Amorino franchises.
These non-compete clauses are standard in franchising to protect the brand and prevent franchisees from using proprietary knowledge to compete, but prospective franchisees should carefully consider the scope and duration of these restrictions. Franchisees should seek clarification from Amorino regarding any activities they wish to pursue that may potentially conflict with these non-compete obligations.