Does the Craters & Freighters agreement allow the franchisee to divert business from any Craters & Freighters franchised business to a Competitive Business?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
15.2.2 Divert, attempt to divert, or solicit business or customers of the Franchised Business, any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business, to any Competitive Business by direct or indirect inducement or otherwise.
15.3 Post-Term Restrictive Covenants.
For a period of two (2) years after the expiration, transfer, or termination of this Agreement, Franchisee and its owner(s) may not, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership, or corporation:
15.3.1 Perform any services for, consult for, engage in, acquire, lend money to, extend credit to, have any interest in, or be employed as an officer, director, executive, or principal of any Competitive Business at or within the following areas: (i) at the Premises of the Franchised Business; (ii) within the Territory granted to Franchisee under this Agreement; or (iii) within a radius of ten (10) miles of (a) the Premises of the Franchised Business, or (b) the premises of any other Craters & Freighters Franchised Business or any Craters & Freighters company-owned or Affiliate-owned outlet then-existing as of the date of the expiration, transfer, or termination of this Agreement.
15.3.2 Divert, attempt to divert, or solicit business or customers of the Franchised Business, any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business, to any Competitive Business by direct or indirect inducement or otherwise.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, franchisees are explicitly prohibited from diverting business to a competitive business, both during the term of the agreement and for a period of two years after the agreement's expiration, transfer, or termination. This restriction applies to diverting or soliciting business or customers from the franchisee's own Craters & Freighters franchise, any other Craters & Freighters franchised business, or any Craters & Freighters company-owned or affiliate-owned business. This restriction covers any attempt to divert business to a Competitive Business through direct or indirect inducement.
During the term of the agreement, franchisees and their owners are restricted from being involved with any Competitive Business that offers similar services such as shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, or freight forwarding services, without prior written consent from Craters & Freighters. An exception exists for owning securities in a Competitive Business if the securities are listed on a stock exchange or traded over-the-counter and represent 5% or less of that class of securities.
After the agreement concludes, the franchisee and their owners are restricted for two years from engaging in a Competitive Business within specific areas: at the premises of the franchised business, within the territory granted to the franchisee, or within a 10-mile radius of the franchised business or any other Craters & Freighters outlet. These covenants are acknowledged as material inducements for Craters & Freighters to enter into the agreement, emphasizing the importance of compliance for the franchisee and their owners. These restrictions are typical in franchising to protect the brand and the franchise system from unfair competition.