Does Amorino warrant that its affiliates will not open similar outlets in the franchisee's Protected Area?

According to Amorino's 2025 Franchise Disclosure Document, Amorino does provide a limited warranty concerning its affiliates and the opening of similar outlets within an Area Developer's territory. Specifically, Amorino warrants that during the term of the Area Development Agreement, none of Amorino's affiliates will open, or permit others to open, outlets substantially similar to those to be opened by the Area Developer. This protection applies to the Area Development Territory, which is defined in Schedule A of the agreement.

This warranty is significant for prospective Area Developers as it offers a degree of territorial security against direct competition from entities related to Amorino. However, it is crucial to note the limitations. The protection applies only to outlets that are 'substantially similar' to those operated by the Area Developer, which leaves room for interpretation and potential disputes. Additionally, the protection is limited to the term of the Area Development Agreement, and the specific boundaries of the Area Development Territory are defined in a separate schedule, which should be carefully reviewed.

It is also important to understand that this protection applies only to affiliates of Amorino. Amorino itself retains various rights, including the right to offer and sell franchises to persons located outside the Area Development Territory, and to establish Amorino stores outside the Area Development Territory, even near the boundaries. Furthermore, Amorino can acquire and operate businesses under different trademarks within or outside the Area Development Territory. Therefore, while the affiliate warranty provides some assurance, it does not eliminate all competitive risks.

Prospective Area Developers should carefully examine Schedule A of the Area Development Agreement to fully understand the scope and limitations of their territorial rights. They should also seek clarification from Amorino regarding what constitutes a 'substantially similar' outlet and how the company interprets and enforces this provision. Understanding these details is essential for making an informed investment decision and managing potential competitive challenges.