What competitive restrictions must Restricted Persons agree to when transferring a Beef O Bradys franchise?

According to the 2025 Beef O Bradys FDD, when transferring a franchise, both the franchisee and their transferring owners, defined as 'Restricted Persons,' must execute a non-competition covenant. This covenant ensures that these individuals agree to be bound by the post-term competitive restrictions that are typically outlined in the franchise agreement, commencing from the effective date of the transfer. This measure is put in place to protect Beef O Bradys' interests and the interests of the new transferee by preventing the previous owner from immediately opening a competing business and leveraging their existing knowledge and relationships.

The non-compete agreement prevents Restricted Persons from engaging in or having an interest in a Competitive Business. A Competitive Business includes owning, operating, or managing any bar, sports pub, restaurant, food service facility, or other business that features similar menu items, products, or services as Beef O Bradys. This extends to businesses that grant franchises or licenses to others for such competitive businesses. The agreement also restricts Restricted Persons from recruiting Beef O Bradys employees.

These restrictions are designed to prevent unfair competition and protect Beef O Bradys' confidential information, system, and market position. By agreeing to these terms, the transferring franchisee and owners acknowledge the importance of these protections for the continued success of the Beef O Bradys brand and the new franchisee's investment. The FDD states that if a Restricted Person does not voluntarily comply with these obligations, a 2-year period will commence upon the entry of an order of an arbitrator, or court if necessary, enforcing this provision.