What is the geographic scope of the post-term non-compete restriction for a Hawaiian Bros Island Grill franchisee?
Hawaiian_Bros_Island_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
r indirectly, or accept employment by, hold an interest in, lend money to, serve as guarantor for, or perform services in any capacity for, any Competitive Business (as defined below) that is located, operates, advertises or provides services in the United States or in any other country where a Hawaiian Bros Restaurant is located.
- (2) Franchisee, for two years following the termination or expiration of this Agreement, or Controlling Principal, for two years following the termination of all of his (i) Ownership Interests in Franchisee; or (ii) the termination or expiration of this Agreement, whichever is first (as applicable, the "Post-Term Restricted Period"), may not own or operate, directly or indirectly, or accept employment by, hold an interest in, lend money to, serve as guarantor for, or perform services in any capacity for, any Competitive Business that is located, operates, advertises or provides services in any of the following:
- (ii) Within the area comprised of a 20-mile radius of the Franchised Restaurant; or
- (iii) Within the area comprised of a 20-mile radius of any Hawaiian Bros Restaurant then existing or under development, whether franchised or owned by Company or any of its Affiliates or licensees; or
- (iv) Within 20 miles of any outer boundary of any territory for which Company has granted development rights for the development of one or more Hawaiian Bros Restaurants.
Source: Item 23 — RECEIPTS (FDD pages 77–262)
What This Means (2025 FDD)
According to the 2025 Hawaiian Bros Island Grill FDD, after the termination or expiration of the franchise agreement, the franchisee and any controlling principal are restricted from engaging in any Competitive Business for a period of two years. A Competitive Business is defined as any island-inspired or Hawaiian-themed restaurant or restaurant that advertises and serves Hawaiian cuisine.
The geographic scope of this restriction includes three specific areas. First, it applies within a 20-mile radius of the franchisee's former Hawaiian Bros Island Grill restaurant. Second, the restriction extends to a 20-mile radius of any other existing or planned Hawaiian Bros Island Grill restaurant, whether it is franchised or owned by the company or its affiliates. Finally, the non-compete applies within 20 miles of any outer boundary of any territory for which Hawaiian Bros Island Grill has granted development rights for one or more restaurants.
This post-term non-compete agreement prevents former franchisees from leveraging the knowledge and experience gained while operating a Hawaiian Bros Island Grill to directly compete with the franchise system. The restrictions cover not only the immediate vicinity of the former restaurant but also areas where other Hawaiian Bros Island Grill locations exist or are planned, protecting the brand's market presence and future expansion efforts. Franchisees should carefully consider these limitations, as they could significantly impact their ability to operate a similar business after leaving the Hawaiian Bros Island Grill system.