After the Burros Fries franchise is terminated or expires, what is the geographic limit of the non-competition covenant?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Franchise Agreement | Summary |
|---|---|---|
| r. Non-competition covenants | FA – Section 19.C | FA – No interest in competing business for |
| after the franchise is terminated | two years within ten miles of any company | |
| or expires. | owned outlet or other franchises. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 46–49)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-competition covenant. This means the franchisee cannot have any interest in a competing business for two years. This restriction applies within a ten-mile radius of any company-owned outlet or other Burros Fries franchises.
This post-term non-compete agreement is fairly standard in the franchise industry. The geographic scope is limited to a ten-mile radius, which is intended to protect Burros Fries's market share without unduly restricting the franchisee's ability to earn a living after the franchise agreement ends. The restriction applies to both company-owned outlets and other franchised locations, ensuring comprehensive protection for the Burros Fries system.
Prospective franchisees should carefully consider the implications of this non-competition covenant. While the ten-mile radius might seem reasonable, it could significantly limit business opportunities depending on the location of other Burros Fries outlets. Franchisees should evaluate the density of existing locations in their area and factor this into their decision-making process. It is also important to understand what constitutes a 'competing business' under the terms of the Franchise Agreement to avoid any unintentional breaches of the covenant.