What is covered under the Grant of Franchise section of the Craters & Freighters agreement?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
time to time. Franchisor grants to franchisees the right to operate a Franchised Business and requires them to use certain trade names, trademarks, and service marks ("Marks").
1. GRANT OF FRANCHISE.
- 1.1 Grant. Subject to the terms and conditions of this Agreement, Franchisor grants to Franchisee a non-exclusive license to operate a Franchised Business at the Premises (as such term is defined below) using the System and the Marks for the Initial Term of this Agreement. Franchisee may not operate the Franchised Business at any site other than the Premises without Franchisor's prior written consent. Franchisee must use the Marks and System only in accordance with the terms and conditions of this Agreement.
- 1.2 Territory. During the Initial Term and any Successor Term (as such terms are defined below), neither Franchisor nor its Affiliates will own, operate or franchise a fixed location for the operation of any other Franchised Business within Franchisee's territory ("Territory") as set forth in Attachment A to this Agreement. For purposes of this Agreement, "Affiliate" means any person or entity that controls, is controlled by, or is in common control with, Franchisor or Franchisee.
- 1.3 Operation of Franchised Business Limited to Territory. Franchisee agrees to devote its best efforts to identifying, attracting, and serving customers who reside or operate within the Territory. Therefore, except as otherwise permitted herein or as approved in advance and in writing by Franchisor, Franchisee will solicit business only in the Territory for the purpose of obtaining customers who reside or operate within the Territory, and Franchisee will not knowingly solicit business outside of the Territory. However, Franchisee is not required to verify that customers to the Franchised Business reside or conduct business within the Territory.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the Grant of Franchise outlines the specific rights and limitations provided to the franchisee. Craters & Freighters grants a non-exclusive license to operate a franchised business at a specific location using their established system and trademarks for the initial term of the agreement. The franchisee is restricted from operating the business at any location other than the approved premises without prior written consent from Craters & Freighters and must adhere to the terms and conditions outlined in the agreement when using the Craters & Freighters system and marks.
The agreement also defines the territory granted to the franchisee, specifying that neither Craters & Freighters nor its affiliates will operate or franchise another fixed location within the franchisee's designated territory during the initial or any subsequent terms. This provision aims to protect the franchisee's market area from direct competition from the franchisor or other franchisees. An affiliate is defined as any entity that controls, is controlled by, or is under common control with Craters & Freighters or the franchisee.
However, the franchise granted is non-exclusive, meaning Craters & Freighters retains certain rights. They can own, franchise, or operate Craters & Freighters outlets outside the franchisee's territory, regardless of proximity. Craters & Freighters can also use their marks and system to sell similar products or services through other distribution channels, including to national accounts, within or outside the franchisee's territory. This allows Craters & Freighters to pursue various business opportunities without being restricted by individual franchise territories, which is a fairly standard practice in franchising to allow the franchisor flexibility.