Following the expiration or termination of the Burger King agreement, for how long are Developers and Principals prohibited from engaging in any hamburger business other than franchised Burger King Restaurants?

According to Burger King's 2025 Franchise Disclosure Document, both the Developer and each Principal are subject to a covenant where they cannot engage in any hamburger business, with the exception of other franchised Burger King restaurants, for a period of one year after the expiration or termination of the agreement. This restriction applies regardless of the reason for termination. The restriction applies to owning, maintaining, engaging in, or having an interest in any hamburger business. This restriction is applicable either at or within two miles of any Burger King Developer Restaurant.

This non-compete obligation extends not only to the Developer and Principals themselves but also to their parents, subsidiaries, and affiliates. This means that these related entities are also barred from engaging in a competing hamburger business within the specified timeframe and geographic area. This provision aims to protect Burger King's market share and proprietary information by preventing former franchisees and their related parties from directly competing with the Burger King system shortly after their involvement with the brand ends.

For a prospective Burger King franchisee, this clause has significant implications. It means that after leaving the Burger King system, they cannot immediately start or invest in a competing hamburger restaurant. This restriction could impact their future business plans and financial opportunities. Franchisees should carefully consider this limitation and factor it into their long-term business strategy, especially if they envision operating other food service businesses in the future. It is also important to note that this obligation is in addition to any restrictive covenant under the Developer Franchise Agreements, potentially creating further limitations.