Does the Confidentiality and Non-Compete Agreement for Burros Fries specify the duration of the non-compete period?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the Franchisee is subject to a non-compete agreement during the term of the agreement and for a period of two years after certain events. Specifically, the non-compete period lasts for two years from the date of a permitted transfer, the expiration or termination of the agreement (regardless of the reason), or a final order from an arbitrator or court regarding the agreement.
During this period, the franchisee is prohibited from owning, maintaining, operating, or being involved with any business that uses any aspect of the Burros Fries system or the overall Burros Fries business concept. This restriction applies to businesses with similar products or services within a ten-mile radius of the franchisee's accepted location. It also extends to a ten-mile radius of any other Burros Fries franchise or company-owned business that exists or is planned at the time of termination or expiration of the agreement, as detailed in the Franchise Disclosure Document in effect at that time.
This non-compete agreement ensures that franchisees do not directly compete with Burros Fries using the knowledge and systems they gained during their franchise term. The geographic limitations (ten-mile radius) and the two-year duration are fairly standard in the franchise industry, aiming to protect the franchisor's market and brand integrity without unduly restricting the franchisee's future business opportunities. The agreement also specifies that if any part of the non-compete clause is deemed unenforceable in one jurisdiction, it does not affect its enforceability in other jurisdictions, and Burros Fries retains an option to purchase the franchisee's business upon expiration or termination of the agreement.