What is the 'In-Term Restricted Period' for a Hawaiian Bros Island Grill developer?
Hawaiian_Bros_Island_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
- (i) During the term of this Agreement, Developer and each Controlling Principal, for so long as such Controlling Principal has an Ownership Interest in Developer (the "In-Term Restricted Period"), will 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 (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.
Source: Item 23 — RECEIPTS (FDD pages 77–262)
What This Means (2025 FDD)
According to the 2025 Hawaiian Bros Island Grill Franchise Disclosure Document, the In-Term Restricted Period for a developer lasts for the duration of the Development Agreement. During this time, the developer and any controlling principals are restricted from owning, operating, or being involved with any Competitive Business, defined as any island-inspired or Hawaiian-themed restaurant, within the United States or any country where a Hawaiian Bros Island Grill restaurant is located. This restriction applies as long as the Controlling Principal has an Ownership Interest in the Developer.
This means that while a developer is under agreement with Hawaiian Bros Island Grill, they cannot be involved with any competing restaurant concept. This restriction is in place to protect Hawaiian Bros Island Grill's market share and prevent developers from using the franchisor's confidential information and system to benefit a competitor. The agreement specifies that this restriction applies to both direct and indirect involvement in a competitive business, ensuring that developers cannot circumvent the covenant through other entities or individuals.
It is important for prospective developers to understand the scope and duration of this restriction before entering into a development agreement with Hawaiian Bros Island Grill. Developers should carefully consider their existing business interests and any potential conflicts that may arise due to this non-compete clause. The FDD specifies that the In-Term Restricted Period is tied to the term of the Development Agreement and the Controlling Principal's Ownership Interest, so understanding the length of the agreement and the implications of ownership are crucial.