After the Craters & Freighters agreement expires, is a franchisee allowed to solicit customers from a Craters & Freighters company-owned business for a Competitive Business?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
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, execut
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, for two years after the franchise agreement expires, the franchisee and their owners are restricted from soliciting business or customers from any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business, to any Competitive Business. This restriction includes any attempt to divert business through direct or indirect methods.
This post-term covenant means that a former Craters & Freighters franchisee cannot actively pursue or attempt to gain customers from existing Craters & Freighters businesses, including company-owned locations, for a competing business venture. This restriction is in place to protect the Craters & Freighters brand and its franchisees from unfair competition by former franchisees who may have gained knowledge or relationships during their time with the franchise.
The restriction applies not only to direct solicitation but also to any indirect inducement aimed at diverting customers. This broad language is likely intended to prevent former franchisees from using any means, subtle or overt, to attract customers away from the Craters & Freighters system. The geographic scope of this restriction extends to the franchisee's former territory and a 10-mile radius around any Craters & Freighters location, further limiting the franchisee's ability to compete in close proximity to existing Craters & Freighters businesses.
It is important for prospective franchisees to understand these post-term restrictions and how they might impact their future business opportunities after leaving the Craters & Freighters system. Franchisees should seek legal counsel to fully understand the implications of these covenants and how they apply to their specific circumstances.