After the Desi District Franchise Agreement expires or is terminated, within what geographic radius of a Desi District business is the Guarantor prohibited from engaging with a Competitor?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
si District Franchise Group. This Section will survive the termination or expiration of the Franchise Agreement indefinitely.
3. Covenants Not to Compete.
- (a) Restriction In Term. During the term of the Franchise Agreement, Guarantor shall not directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor.
- (b) Restriction Post Term. For two years after the Franchise Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer by Guarantor), Guarantor shall not directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor located within five miles of Franchisee's Territory or the territory of any other Desi District business operating on the date of termination or transfer, as applicable. If the Franchise Agreement is terminated before the Territory is determined, then the area of non-competition will the Development Area and the territory of any other Desi District business operating on the date of termination.
- (c) Interpretation.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, a Guarantor is subject to a post-term non-compete agreement. For two years after the Franchise Agreement expires or is terminated for any reason, the Guarantor cannot have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor. This restriction applies within five miles of the franchisee's territory or the territory of any other Desi District business operating on the date of termination.
If the Franchise Agreement is terminated before the territory is determined, the non-competition area will be the Development Area and the territory of any other Desi District business operating on the date of termination.
The Guarantor's compliance with these obligations is critical. If the Guarantor fails to comply with the non-compete obligations during the restrictive period, the period will be extended by an additional day for each day of noncompliance. This could significantly prolong the duration of the non-compete agreement.