What is the section number for 'Covenants' in the Lees Famous Recipe Franchise Agreement?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
- D.
Post-Term Covenant Not to Compete.
You (and the Operating Principal and each Principal Owner) will not, for a period of two (2) years after this Agreement expires or is terminated or the date on which you cease to operate the Restaurant, whichever is later, directly or as an employee, agent, consultant, partner, officer, director or shareholder of any other person, firm, entity, partnership or corporation: (1) divert or attempt to divert any business or customers of the Restaurant to any Competing Business or perform any act that would damage the goodwill associated with the Marks or the System; (2) own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in, or assist any person or entity engaged in any restaurant business which is located at the former site of the Restaurant and offers menu items similar to those offered at the Restaurant; or (3) own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in, or assist any person or entity engaged in any Competing Business that is located (i) at the former site of the Restaurant, (ii) within a five (5) mile radius of the former site of the Restaurant or any other then-existing Lee's Famous Recipe Restaurant, (iii) within the Designated Territory, or (iv) within a five (5) mile radius of the Designated Territory; provided, however, that this Section 13(D) will not apply to: (i) other Lee's Famous Recipe Restaurants that you operate under separate Lee's Famous Recipe franchise agreements; or (ii) the ownership of securities listed on a stock exchange or traded on the over-the-counter market that represent one percent (1%) or less of that class of securities.
- E.
Injunctive Relief.
You agree that damages alone cannot adequately compensate us if there is a violation of any covenant in this Section in that injunctive relief is essential for our protection.
You therefore agree that we may seek injunctive relief without posting any bond or security, in addition to the remedies that may be available to us at equity or law, if you or anyone acting on your behalf violates any covenant in this Section.
The covenants stated in this Section will survive the termination or expiration of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 69–70)
What This Means (2025 FDD)
Based on the 2025 Lees Famous Recipe Franchise Disclosure Document, the section pertaining to covenants is Section 13. Specifically, this section outlines the post-term covenant not to compete, which restricts the franchisee (and related parties) from engaging in similar businesses within a defined area and time frame after the franchise agreement expires or is terminated. This restriction aims to protect Lees Famous Recipe's brand and market position.
Section 13(D) details the specifics of the post-term covenant not to compete, stating that for two years after the agreement ends, the franchisee cannot operate or be involved with a competing business at the former restaurant site, within a five-mile radius of the former site or any existing Lees Famous Recipe Restaurant, within the Designated Territory, or within a five-mile radius of the Designated Territory. There are exceptions for other Lees Famous Recipe Restaurants operated under separate agreements and for ownership of securities representing 1% or less of a publicly traded company.
Section 13(E) emphasizes the importance of injunctive relief for Lees Famous Recipe in case of covenant violations, acknowledging that monetary damages alone may not be sufficient. It allows Lees Famous Recipe to seek injunctive relief without posting a bond or security, in addition to other available remedies, to prevent or stop any breach of the covenants. The FDD also states that these covenants survive the termination or expiration of the Franchise Agreement, meaning that these obligations continue even after the franchise relationship ends, further protecting Lees Famous Recipe's interests.