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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 What-A-Burger franchises in different south Texas markets located in San Antonio and the Rio Grande Valley. The franchise agreement with What-A-Burger 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 Dallas-Fort Worth) metroplex. Upon discovery of this transaction, What-A-Burger terminated its franchise agreements with the owners for violating the franchise agreement. What-A-Burger claimed it had franchises in north Texas and the shareholder would be in direct competition. The shareholders argued that since the What-A-Burger and Burger King franchises were in different geographical regions and owned by different corporations the franchise agreement with What-A-Burger had not been breached. Who is correct?

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