For how long after the Burros Fries franchise agreement expires or terminates is the franchisee prohibited from diverting business to a competitor?
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 competing with Burros Fries for a period of two years after the franchise agreement expires or terminates. This restriction begins from the date of a permitted transfer, the expiration or termination of the agreement (regardless of the reason), or a final order from an arbitrator or court.
During this two-year period, the franchisee is prohibited from owning, operating, or being involved in any business that uses any aspect of the Burros Fries system or the overall Burros Fries business concept, especially those offering similar products or services. This restriction applies within a ten-mile radius of the franchisee's original location or any other existing or planned Burros Fries franchise or company-owned business.
This non-compete agreement is in place to protect Burros Fries's confidential information, specialized training, and overall system. The FDD states that this covenant is specifically given in exchange for access to trade secrets provided during training and ongoing support programs. If any part of this covenant is deemed unenforceable in a particular jurisdiction, Burros Fries has the option to purchase the franchisee's business upon the agreement's expiration or termination, which they may exercise with thirty days' written notice.
Prospective franchisees should carefully consider the implications of this non-compete clause, as it could significantly limit their business opportunities for two years after leaving the Burros Fries system. It is advisable to seek legal counsel to fully understand the scope and enforceability of this provision in their specific jurisdiction.