After termination or expiration of an Amorino franchise, what is the definition of 'diverting' customers that is prohibited?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
| Non r. competition covenants after the franchise is | Section 18.D of the franchise agreement | During a two-year uninterrupted period after the expiration or termination, neither you, nor any officer, director, shareholder or general partner or limited partner of a corporate or partnership franchisee, shall: |
|---|---|---|
| terminated or expires | (1) Divert or attempt to divert any present or prospective customer or supplier of any Amorino Store 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. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 55–67)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, after the expiration or termination of a franchise agreement, the franchisee is restricted from actions that could divert customers or suppliers to a competitor. Specifically, for a two-year period, the franchisee (or any of its officers, directors, shareholders, or partners) cannot directly or indirectly induce Amorino's present or prospective customers or suppliers to switch to a competitor. This also includes any action that could harm the goodwill associated with Amorino's proprietary marks and system.
In practical terms, this means a former Amorino franchisee cannot actively solicit Amorino customers to patronize a competing gelato business. This restriction aims to protect Amorino's customer base and brand reputation by preventing former franchisees from leveraging their knowledge of the Amorino system and customer relationships to benefit a competing business. The non-compete terms are comprehensive, extending to anyone associated with the franchisee's business structure.
This type of clause is common in franchise agreements to protect the franchisor's investment in its brand and customer relationships. Prospective Amorino franchisees should carefully consider the implications of this restriction, especially if they plan to remain in the gelato business after the franchise agreement ends. The three-mile radius restriction could significantly limit their options for opening a competing business in the same geographic area.