Does the Confidentiality and Non-Compete Agreement for Burros Fries impose any obligations on the franchisee after the termination of the franchise agreement?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Against Franchisor
Franchisee specifically acknowledges that, pursuant to this Agreement, Franchisee will receive valuable specialized training, our Confidential Information and our System.
Franchisee agrees that, except as otherwise approved in writing by us, Franchisee shall not, during the term of this Agreement and for a period of two (2) years from the date of (i) a transfer permitted under this Agreement; (ii) the expiration or termination of this Agreement (regardless of the cause for termination); or (iii) a final order of a duly authorized arbitrator, panel of arbitrators, or a court of competent jurisdiction (after all appeals have been taken) with respect to any of the foregoing or with respect to the enforcement of this Section 19.C, either directly or indirectly for itself, or through, on behalf of, or in conjunction with, any person, persons, or legal entity, own, maintain, operate, engage in, be employed by, or have any interest in any business using any aspect of the System, the overall Burros & Fries business concept, with similar Products and/or Services within a ten (10) mile radius of the Accepted Location designated hereunder, or within a ten (10) mile radius of any other System franchise or company-owned business in existence or planned as of the time of termination or expiration of this Agreement as identified in the Franchise Disclosure Document in effect as of the date of expiration or termination of this Agreement.
The unenforceability of all or part of this covenant not to compete in any jurisdiction will not affect the enforceability of this covenant not to compete in any other jurisdictions, or the enforceability of the remainder of this Agreement. This covenant not to compete is given in part in specific consideration for access to trade secrets provided as a part of our training or ongoing support programs. In any jurisdiction in which the covenant contained in this Section 19 or any part of it is deemed not enforceable in whole or in part, Franchisee hereby grants us an option to purchase Franchisee's Business on expiration or termination of this Agreement. In such case, we may exercise this option by giving thirty (30) days' written
notice to Franchisee (Sections 22.C and 22.E).
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, the franchisee has obligations that extend beyond the termination of the franchise agreement. Specifically, the franchisee is subject to both confidentiality and non-compete obligations.
Regarding confidentiality, the franchisee must not use or disclose any confidential and proprietary information, including trade secrets, strategies for site acquisition, build-out, design, décor, distinctive products, services, proprietary recipes, food preparation techniques, methods, procedures, and purchasing strategies, whether during the term of the agreement or thereafter. This obligation extends to the franchisee's owners (if the franchisee is an entity), officers, directors, agents, employees, and independent contractors.
In terms of non-competition, the franchisee is restricted from engaging in any business using any aspect of the Burros Fries system or the overall Burros & Fries business concept with similar products and/or services for two years after the termination or expiration of the agreement. This restriction applies within a ten-mile radius of the former Accepted Location or any other Burros Fries franchise or company-owned business. These post-term obligations are typical in franchising to protect the brand's confidential information and market presence.