What is a Burros Fries franchisee prohibited from doing regarding business opportunities after the termination of the franchise agreement?
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, a franchisee is restricted from certain competitive activities for a specified period after the termination or expiration of the franchise agreement. Specifically, for two years following the transfer, expiration, or termination of the agreement (regardless of the reason), or after a final order from an arbitrator or court, the franchisee cannot engage in any business that utilizes the Burros & Fries system or overall business concept. This includes owning, maintaining, operating, being employed by, or having any interest in a similar business.
The restriction applies within a 10-mile radius of the franchisee's original location or any other existing or planned Burros & Fries franchise or company-owned business. This non-compete clause is in place to protect Burros Fries's valuable specialized training, confidential information, and overall system. The FDD specifies that this covenant is given in consideration for access to trade secrets provided as part of the training and support programs.
This means that a former Burros Fries franchisee is significantly limited in their ability to open a competing restaurant or work for a competitor within a defined geographic area for two years after leaving the Burros Fries system. The franchisee also acknowledges that the unenforceability of the non-compete clause in one jurisdiction does not affect its enforceability in other jurisdictions. If the covenant is deemed unenforceable, Burros Fries has the option to purchase the franchisee's business upon expiration or termination of the agreement, which they can exercise with thirty days' written notice.