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Three Texas investors were shareholders in TexasFastFoodSouth, Inc. which owned several What - A - Burger franchises in different south Texas markets located in San
Three Texas investors were shareholders in TexasFastFoodSouth, Inc. which owned several WhatABurger franchises in different south Texas markets located in San Antonio and the Rio Grande Valley. The franchise agreement with WhatABurger stated that franchisees could not own the "same or similar" competing franchises in the same geographical area. The same three investors formed TexasFastFoodNorth, Inc. and obtained a Burger King franchise for the north Texas the DallasFort Worth metroplex. Upon discovery of this transaction, WhatABurger terminated its franchise agreements with the owners for violating the franchise agreement. WhatABurger claimed it had franchises in north Texas and the shareholder would be in direct competition. The shareholders argued that since the WhatABurger and Burger King franchises were in different geographical regions and owned by different corporations the franchise agreement with WhatABurger had not been breached. Who is correct?
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