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What constitutes a 'transfer of all interest' in the Franchise Agreement for Burros Fries, triggering the non-compete clause?

Burros_Fries Franchise · 2024 FDD

Answer from 2024 FDD Document

b. Employ or seek to employ any person who is at the time employed by us or any franchisee or developer of ours, or otherwise directly or indirectly induce such persons to leave that person's employment.

  • c. Directly or indirectly, for yourself or through, on behalf of or in conjunction with any person, partnership or corporation, own, maintain, operate, engage in or have any financial or beneficial interest in (including interest in corporations, limited liability companies, partnerships, trusts, unincorporated associations or joint ventures), advise, assist or make loans to, any business which is the same as or similar to the Burros & Fries Business including, but not limited to, the offering of products and services that are similar to the Products and Services which have been offered through the Business or is intended to be, located within a ten (10) mile radius of the Approved Location in the Franchise Agreement or of any Burros & Fries business (which includes companyowned businesses and/or other franchise businesses) in existence or under construction as of the expiration or termination of, or the transfer of all or your interest in, the Franchise Agreement.
    1. You undertake to use your best efforts to ensure that your staff acts as required by this Agreement.
    1. You agree that in the event of a breach of this Agreement, we would be irreparably injured and be without an adequate remedy at law. Therefore, in the event of such a breach, or threatened or attempted breach of any of the provisions hereof, we shall be entitled to enforce this Agreement and shall be entitled, in addition to any other remedies which are available to it at law or in equity, including the right to terminate the Franchise Agreement, to a temporary and/or permanent injunction and a decree for the specific performance of the terms of this Agreement, without the necessity of showing actual or threatened harm and without being required to furnish a bond or other security.
    1. You agree to pay all expenses (including court costs and reasonable legal fees) incurred by us and You in enforcing this Agreement.
    1. Any failure by us or You to object or to take action with respect to any breach of this Agreement by You shall not operate or be construed as a waiver of or consent to that breach or any later breach by You.

Source: Item 22 — CONTRACTS (FDD page 53)

What This Means (2024 FDD)

According to the 2024 Burros Fries Franchise Disclosure Document, the non-compete clause is triggered upon the "transfer of all or your interest in, the Franchise Agreement." This means that if a franchisee sells their entire stake in the Burros Fries franchise, they become subject to the non-compete restrictions outlined in the agreement.

The non-compete agreement states that the franchisee cannot, either directly or indirectly, engage in any business that is the same as or similar to the Burros & Fries Business. This includes owning, maintaining, operating, or having any financial interest in such a business. The restriction extends to advising, assisting, or making loans to any competing business.

This non-compete restriction applies within a ten (10) mile radius of the Approved Location in the Franchise Agreement or of any Burros & Fries business (which includes company-owned businesses and/or other franchise businesses) in existence or under construction as of the expiration or termination of, or the transfer of all or your interest in, the Franchise Agreement. The duration of this non-compete period is two (2) years from the date of the transfer.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.