If a covenant in the Burros Fries Franchise Agreement is deemed unenforceable, what happens?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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 the 2024 Burros Fries Franchise Disclosure Document, the unenforceability of any part of the covenant not to compete in one jurisdiction does not impact its enforceability in other jurisdictions, nor does it affect the enforceability of the rest of the Franchise Agreement. This means that even if a specific clause within the non-compete agreement is deemed invalid in one area, the rest of the agreement remains in effect wherever it is enforceable.
In any jurisdiction where the non-compete covenant is deemed unenforceable, either wholly or partially, Burros Fries gains the option to purchase the franchisee's business upon the expiration or termination of the Franchise Agreement. To exercise this option, Burros Fries must provide the franchisee with a written notice 30 days in advance.
This clause provides Burros Fries with a safety net if the non-compete agreement is challenged. It ensures that the brand can still maintain control over the market and prevent a former franchisee from directly competing, by allowing Burros Fries to buy the business. For a prospective franchisee, this means that the ability to sell their business to a third party may be limited if the non-compete is deemed unenforceable, as Burros Fries has the first right to purchase the business.