Does the Desi District Guaranty specify any geographic limitations on the non-compete obligations?

According to Desi District's 2024 Franchise Disclosure Document, the Guaranty agreement includes geographic limitations on the non-compete obligations. Specifically, for two years after the Franchise Agreement expires or is terminated, the Guarantor cannot have any involvement with a Competitor within five miles of the franchisee's territory or the territory of any other Desi District business operating on the date of termination or transfer. 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.

This means that if a guarantor, such as an owner with an equity interest in the franchisee, decides to leave the Desi District system, they are restricted from engaging with competing businesses within a defined radius of existing Desi District locations. This restriction applies for a period of two years post-termination or expiration of the franchise agreement. The geographic scope is limited to a five-mile radius, which is fairly standard in the franchise industry, although the specific distance can vary.

This non-compete clause aims to protect Desi District's market share and proprietary information by preventing former franchisees or their owners from directly competing in close proximity to existing locations. The clause is activated upon termination or expiration of the franchise agreement, ensuring that the restrictions apply when the franchisee or guarantor is no longer affiliated with the Desi District brand. The agreement also clarifies that if the territory hasn't been formally defined before termination, the development area serves as the basis for the non-compete zone. This ensures that Desi District's interests are protected even in the early stages of the franchise agreement.