Can Burros Fries own or operate a business anywhere which does not use the Burros Fries Marks?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Agreement;
- (6) Own and/or operate ourselves or authorize others to own and/or operate (a) any business located outside the Territory Location as designated on your Franchise Agreement, whether or not using the Marks and/or System, (b) any business anywhere, whether using the Marks and /or System or not, which is not substantially similar to the business franchised to you under the Franchise Agreement and/or (c) any business anywhere which does not use the Marks; and
We are not responsible for paying any compensation to you concerning the sale of products (including menu and retail items), services or kitchen equipment (if we choose to sell kitchen equipment in the future) by using the Internet or other similar venue, by alternative means of distribution, advertising cooperative programs, outlets, businesses that are or are not substantially similar to the Franchised Business or any business that does not use the Marks. For clarity, the Franchise Agreement grants you no rights to sell and/or distribute products (including menu and retail items) or kitchen equipment or offer services through any alternative channels of distribution without our permission or share in any of the proceeds from our activities through alternative channels of distribution.
Source: Item 12 — TERRITORY (FDD pages 38–40)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, Burros Fries retains significant rights regarding business operations, including the ability to operate businesses that do not use the Burros Fries Marks. Specifically, Burros Fries reserves the right to own and/or authorize others to own and/or operate any business anywhere which does not use the Marks. This clause provides Burros Fries with considerable latitude to engage in diverse business ventures, irrespective of whether they align directly with the franchised Burros Fries concept.
This provision has important implications for franchisees. It means that Burros Fries could potentially operate or franchise other types of food service businesses, even in the same general area as a Burros Fries franchise. While these other businesses would not use the Burros Fries Marks, they could still compete for the same customer base, potentially impacting a franchisee's revenue. This is a standard practice in franchising, where franchisors often retain broad rights to diversify and expand their business models.
Furthermore, Burros Fries is not obligated to compensate franchisees for sales of products or services through alternative channels of distribution, outlets, or businesses that are not substantially similar to the franchised business, or any business that does not use the Marks. This clarifies that the franchisee has no rights to proceeds from Burros Fries's activities through these alternative channels without explicit permission. Prospective franchisees should consider this when evaluating the potential for competition and revenue generation within their territory.