Does the non-compete clause in the Burros Fries franchise agreement prevent a franchisee from soliciting patrons of other Burros Fries franchisees?
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.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
Based on the 2024 Burros Fries Franchise Disclosure Document, the provided excerpts do not explicitly state whether a franchisee is prohibited from soliciting patrons of other Burros Fries franchisees. However, the agreement does include a clause where the franchisee agrees not to compete with Burros Fries. This clause restricts the franchisee from operating a similar business within a 10-mile radius of their accepted location or any other existing or planned Burros Fries franchise or company-owned business.
While the non-compete agreement focuses on preventing franchisees from operating competing businesses, it does not directly address the solicitation of customers from other Burros Fries locations. The FDD excerpts also detail the rights Burros Fries retains, including the ability to operate businesses, sell products, and develop other concepts, without providing compensation to the franchisee. This highlights the franchisor's control over the brand and its various channels of distribution.
To fully understand the restrictions on soliciting customers from other Burros Fries locations, a prospective franchisee should seek clarification from the franchisor. Specifically, they should inquire about any internal policies or guidelines that address this issue, as well as any potential implications for marketing or promotional activities that might overlap with other franchisees' territories. Understanding these nuances is crucial for ensuring compliance with the franchise agreement and maintaining positive relationships within the Burros Fries franchise network.
In summary, while the provided FDD excerpts outline non-compete restrictions related to operating a similar business, they do not explicitly address the solicitation of customers from other Burros Fries franchisees. Therefore, further clarification from the franchisor is recommended to fully understand the scope of permissible activities.