Under what circumstances will the covenants in the Amorino franchise agreement that require performance after termination still be enforceable?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
(10) You shall comply with any covenants contained in this Agreement that survive termination or expiration of this Agreement, including the covenants set forth in Section 18.D.
(11) You shall pay us a delay fee of $500 U.S. Dollars for each day that you continue to violate the post-termination obligations in this Section.
D.
Non-Competition After Expiration or Termination of Agreement.
Commencing upon the later of: (a) a transfer permitted under this Agreement, expiration of this Agreement, or termination of this Agreement (regardless of the cause for termination) or (b) a final court order (after all appeals have been taken) with respect to any of the foregoing events or with respect to enforcement of this Section, and continuing for an uninterrupted period of two years thereafter, you and each of your Principals, shall not either directly or indirectly, for yourselves, or through, on behalf of, or in conjunction with any person, persons, or legal entity, own, maintain, advise, operate, engage in, be employed by, make loans to, or have any interest in or relationship or association with a business that engages in the production or sale at retail or wholesale of ice cream products, other than a Amorino Store operated pursuant to a then currently effective franchise agreement with Amorino, and (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.
11. CONFIDENTIAL INFORMATION
A. Confidentiality. You shall maintain the confidentiality of all Confidential Information. You shall use Confidential Information only in connection with the operation of the Franchised Business, and shall divulge Confidential Information only to your employees and only on a need to know basis. This obligation shall survive termination or expiration of this Agreement] for as long a period as permitted by law.
C. Return of Confidential Information. Upon request, and upon termination of this Agreement, you shall return to Amorino all documents, materials and records containing or referring to the Confidential Information, including all copies, summaries, extracts and notes derived from the Confidential Information.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, franchisees must comply with specific covenants even after the franchise agreement expires or is terminated. These include the covenants detailed in Section 18.D of the agreement.
One key post-termination covenant is non-competition. For two years after the agreement ends (due to transfer, expiration, or termination), the franchisee and their principals cannot be involved in any business that produces or sells ice cream products at retail or wholesale. This restriction applies to the location of the former Amorino store, within the store's former protected area (or a three-mile radius if no protected area existed), or within a three-mile radius of any other Amorino store. This obligation is paused during any period of noncompliance.
Another crucial aspect is maintaining confidentiality. Franchisees must keep all confidential information secret, using it only for operating the Amorino franchise. This obligation extends beyond the agreement's termination, lasting as long as legally permitted. Upon termination, all documents and materials containing confidential information must be returned to Amorino. Amorino can take legal action to prevent the disclosure of confidential information, seeking injunctions and recovering attorney's fees and costs.
Failure to comply with these post-termination obligations can result in a delay fee of $500 per day. Additionally, franchisees must promptly pay all outstanding sums to Amorino and its affiliates and sign a general release of claims against Amorino. These provisions ensure that franchisees continue to uphold their responsibilities to the Amorino system even after the formal agreement concludes.