What is the prohibited action for Burros Fries regarding establishing another business within a franchisee's territory?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee is provided with a Territory then during the term of this Agreement, we shall not establish, nor license another party or entity to establish, Burros & Fries Business within the Territory outlined above. If Franchisee decides to open additional Businesses and buys the rights to additional Franchises, then those separate franchise agreement(s) will dictate the terms of the applicable territory (a separate Franchise Agreement is required for each additional Business as defined in Section 9.D of this Agreement).
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries' 2024 Franchise Disclosure Document, if a franchisee is granted a territory, Burros Fries is prohibited from establishing or licensing another party to establish a Burros & Fries Business within that designated territory during the term of the agreement. This provision aims to protect the franchisee's market area from direct competition from other Burros Fries outlets. However, this protection is contingent upon the franchisee being assigned a specific territory in the franchise agreement.
It is important to note that if a franchisee chooses to expand by opening additional Burros Fries businesses, each new location requires a separate franchise agreement. The terms of the territory for these additional franchises will be governed by their respective franchise agreements, meaning the initial territory agreement does not automatically extend to cover subsequent locations. This encourages careful consideration of territory terms for each new franchise.
This territorial protection is subject to certain limitations. Burros Fries retains rights not expressly granted to the franchisee, including the right to operate or authorize others to operate businesses that are not substantially similar to a Burros & Fries Business within the franchisee's territory. Burros Fries also reserves the right to sell branded products through other channels of distribution, such as the internet, without compensating the franchisee. These retained rights allow Burros Fries to explore alternative business models and revenue streams without necessarily infringing upon the franchisee's protected territory.