What agreement must Craters & Freighters franchisees ensure their Restricted Persons execute?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Post-Term Competition Restriction.
For a period of two (2) years after (a) Restricted Person's relationship with Franchisee ends; (b) the expiration or termination of the Franchise Agreement; or (c) the approved transfer of the Franchise Agreement to a new franchisee, whichever occurs first, Restricted Person will not, without Franchisor's consent, directly or indirectly (such as through an affiliate or a family member) 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 the Franchisee 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 the Franchise Agreement.
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- Reasonableness of Restrictions. Restricted Person acknowledges and confirms that the length of the term and geographical restrictions contained in Section 5 above are fair and reasonable and not the result of overreaching, duress, or coercion of any kind. In the event a court of competent jurisdiction rules that any of the restrictions set forth in this Agreement is unenforceable by virtue of its scope or in terms of geographic area, type of business activity prohibited, and/or length of time, Restricted Person agrees to comply with any lesser restriction deemed enforceable by the court.
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- Enforcement. If Franchisor initiates a legal proceeding to enforce this Agreement and prevails in the proceeding, Restricted Person agrees to reimburse Franchisor for its enforcement costs and expenses, including attorneys' fees.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, a Restricted Person must adhere to a Post-Term Competition Restriction agreement. This agreement outlines specific limitations on the Restricted Person's activities following the termination of their relationship with the franchisee, the expiration or termination of the Franchise Agreement, or the approved transfer of the Franchise Agreement to a new franchisee. These restrictions are effective for two years.
The agreement prohibits the Restricted Person from engaging in any Competitive Business within specific areas without Craters & Freighters' consent. These areas include the premises of the franchised business, the territory granted to the franchisee, and within a ten-mile radius of the franchised business or any other Craters & Freighters outlet. The agreement also includes an acknowledgement from the Restricted Person that these restrictions are reasonable and not a result of any overreaching or coercion.
Furthermore, the agreement stipulates that if Craters & Freighters initiates legal proceedings to enforce the agreement and wins, the Restricted Person is responsible for reimbursing Craters & Freighters for all enforcement costs, including attorney's fees. This clause emphasizes the importance of compliance and the potential financial consequences of violating the agreement.
Prospective Craters & Freighters franchisees should carefully review this agreement with any Restricted Persons to ensure they understand the terms and conditions. It is also important to note that the agreement is legally binding and enforceable, so all parties should be aware of their rights and obligations.