Under what circumstances is a Burros Fries franchisee considered to be on notice of the expiration or termination of another franchise agreement, according to Section 16.C?
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, Section 19.C, which addresses franchisee non-compete obligations, includes a reference to the FDD. Specifically, a Burros Fries franchisee is subject to non-compete restrictions within a ten-mile radius of any other Burros & Fries franchise or company-owned business in existence or planned as of the time of termination or expiration of the Franchise Agreement.
This determination is based on the locations identified in the Franchise Disclosure Document in effect as of the date of expiration or termination of the agreement. Therefore, the franchisee is considered to be on notice of existing and planned locations as documented in the then-current FDD.
In practical terms, this means a prospective Burros Fries franchisee should carefully review the list of existing and planned locations in the FDD before signing the agreement to understand the potential limitations on where they can operate a similar business should their franchise agreement end. The franchisee is bound by the FDD in effect at the time of termination or expiration, so future FDDs could impact their non-compete obligations.