Does the Confidentiality and Non-Compete Agreement for Burros Fries specify any geographic limitations for the non-compete clause?
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.
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
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the Franchise Agreement includes geographic limitations regarding non-compete clauses. Specifically, during the term of the agreement and for two years after a transfer, expiration, or termination, the franchisee cannot engage in a similar business within a 10-mile radius of their Burros Fries location. This restriction also applies to any other existing or planned Burros Fries franchise or company-owned business.
This means that after the franchise agreement ends, a former Burros Fries franchisee is restricted from opening a competing business within the specified radius. This restriction aims to protect Burros Fries's market and brand presence by preventing franchisees from leveraging the knowledge and experience gained during their franchise term to directly compete in the same local market. The geographic limitation ensures that the non-compete clause is reasonably tailored to protect the franchisor's interests without unduly restricting the franchisee's ability to pursue other business ventures outside the defined area.
The FDD also states that the unenforceability of the non-compete agreement in one jurisdiction does not affect its enforceability in other jurisdictions. This clause provides Burros Fries with some protection against franchisees attempting to circumvent the non-compete agreement by arguing its invalidity in a specific location. Additionally, if the non-compete clause is deemed unenforceable, Burros Fries has the option to purchase the franchisee's business upon termination or expiration of the agreement, which they can exercise with thirty days' written notice.
It is important for prospective franchisees to carefully consider these non-compete terms and understand the geographic limitations before entering into a franchise agreement with Burros Fries. Franchisees should evaluate whether these restrictions align with their long-term business goals and plans, as they could impact their ability to operate a similar business in the future within the defined radius.