Is Craters & Freighters allowed to acquire and convert businesses offering similar services to the Craters & Freighters system?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
itory are entitled the freedom to choose any Craters & Freighters outlet which they believe will best serve them and their needs, and that they may seek service from Franchisee.
- 1.5 Non-Exclusivity; Franchisor's Reservation of Rights. Franchisee acknowledges that the franchise granted hereunder is non-exclusive and that Franchisor and its Affiliates retain the exclusive right, among others to:
- 1.5.1 Own, franchise, or operate Craters & Freighters outlets at any location outside of the Territory, regardless of the proximity to the boundaries of the Territory; provided, however, Franchisor will not establish within the Territory another franchisee or company-owned outlet which may also use the Marks;
- 1.5.2 Use the Marks and System to sell any products or services similar to those which Franchisee will sell, through any alternate channels of distribution within or outside of the Territory, including to National Accounts (as defined below). This includes, but is not limited to, other channels of distribution such as television, mail order, catalog sales, wholesale to unrelated retail outlets, or over the Internet. Franchisor exclusively reserves alternative channels of distribution such as the Internet, catalog sales, telemarketing or other direct marketing, as channels of distribution for Franchisor. Franchisee may not independently use alternative channels of distribution to make sales within or outside the Territory without Franchisor's prior written approval;
- 1.5.3 Use and license the use of other proprietary and non-proprietary marks or methods which are not the same as or are confusingly similar to the Marks, whether in alternative channels of distribution or in the operation of a business offering shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, and freight forwarding services and products, at any location, including within the Territory, which may be similar to or different from Franchisee's Franchised Business;
- 1.5.4 Purchase or be purchased by, or merge or combine with, any business, including a business that competes directly with Franchisee's Franchised Business, wherever located, so long as such business does not operate under the same or similar trademarks or service mark;
- 1.5.5 Acquire and convert to the system operated by Franchisor any businesses offering shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, and freight forwarding services and products, including such businesses operated by competitors or otherwise operated independently or as part of, or in association with, any other system or chain, whether franchised or corporately owned and whether located inside or outside of the Territory; and
- 1.5.6 Implement multi-area marketing programs, including but not limited to a National Accounts program.
- 1.6 Best Efforts.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, Craters & Freighters retains specific rights regarding the operation of businesses offering similar services. Specifically, Craters & Freighters reserves the right to use the Marks and System to sell similar products or services through alternate distribution channels, both within and outside the franchisee's territory. This includes sales to National Accounts.
This means that while a franchisee is granted a territory, Craters & Freighters maintains the right to operate or franchise other outlets outside of that territory, regardless of proximity. More importantly, Craters & Freighters can use its brand and system to sell similar services through different channels, even within a franchisee's territory. This could include online sales, partnerships with other businesses, or direct sales to large national accounts.
For a prospective franchisee, this non-exclusivity has significant implications. It means that Craters & Freighters could potentially compete with its own franchisees through other channels. While the franchisee is expected to focus on their designated territory, Craters & Freighters is not restricted from pursuing other avenues for offering similar services. This is a fairly common practice in franchising, allowing franchisors to explore different market segments and distribution methods. However, it's crucial for franchisees to understand the potential for internal competition and how it might affect their business.
Furthermore, during the term of the agreement, franchisees are restricted from engaging in or having an interest in any Competitive Business without prior written consent from Craters & Freighters. This restriction extends to performing services for, consulting for, acquiring, or being employed by a business offering similar services. This clause ensures that franchisees remain committed to the Craters & Freighters system and do not divert resources or knowledge to competing ventures. After the agreement expires, there are still restrictions in place for a period of two years, preventing the franchisee from engaging in a Competitive Business within a specific area.