What specific business activities are Burros Fries franchisees prohibited from engaging in within the restricted radius during the non-compete period?
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 the 2024 Burros Fries Franchise Disclosure Document, franchisees are restricted from certain business activities during the term of the agreement and for two years after a transfer, termination, or final order. Specifically, within a ten-mile radius of the Accepted Location or any other Burros Fries franchise or company-owned business, franchisees cannot own, maintain, operate, engage in, be employed by, or have any interest in any business using any aspect of the Burros Fries system or the overall Burros Fries business concept, offering similar products and/or services.
This non-compete clause prevents franchisees from directly or indirectly competing with the Burros Fries system. The restrictions apply if the franchisee transfers the franchise, upon expiration or termination of the agreement, or after a final order from an arbitrator or court. The geographical limitation is a ten-mile radius, which is fairly standard in the franchise industry, but franchisees should assess whether this radius adequately protects their investment, given local market conditions.
The FDD specifies that this covenant is in consideration for access to trade secrets provided during training and ongoing support. If any part of the non-compete agreement is deemed unenforceable in a particular jurisdiction, Burros Fries has the option to purchase the franchisee's business upon expiration or termination of the agreement, which they can exercise with thirty days' written notice.
Prospective franchisees should carefully consider the implications of this non-compete agreement. It is essential to understand the scope of prohibited activities and the geographical limitations to assess the potential impact on future business opportunities after leaving the Burros Fries system. Consulting with a legal professional to review the non-compete terms is advisable.