Does the Confidentiality and Non-Compete Agreement for Burros Fries specify any geographic limitations on the non-solicitation provisions?
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 the 2024 Burros Fries Franchise Disclosure Document, the Franchise Agreement includes geographic limitations regarding competition. During the term of the agreement and for two years after a transfer, expiration, termination, or final order from an arbitrator or court, the franchisee cannot engage in a similar business within a 10-mile radius. This radius is measured from the franchisee's approved location or any other existing or planned Burros Fries franchise or company-owned business.
This restriction prevents franchisees from using the knowledge and training gained from Burros Fries to directly compete with the brand in a defined geographic area. The non-compete clause is tied to the franchisee receiving specialized training, confidential information, and access to the Burros Fries system. This clause aims to protect Burros Fries' market share and brand integrity by limiting the potential for franchisees to open competing businesses nearby.
The FDD also states that if any part of this non-compete agreement is deemed unenforceable in one jurisdiction, it does not affect its enforceability in other jurisdictions or the rest of the agreement. In areas where the non-compete is not enforceable, Burros Fries has the option to purchase the franchisee's business upon the agreement's expiration or termination. This highlights the importance Burros Fries places on preventing competition and protecting its business model.
Prospective franchisees should carefully consider these restrictions and how they might impact their future business opportunities. It is important to understand the geographic scope and duration of the non-compete agreement before entering into a franchise agreement with Burros Fries.