What is the definition of 'Adjacent Territory' in the Craters & Freighters franchise agreement?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.4 Servicing in Unsold Adjacent Territories.
Franchisor may grant Franchisee the right, in Franchisor's sole determination, to promote and advertise the Franchised Business to customers, or to service customers, in an unsold territory adjacent to the Territory ("Adjacent Territory").
Franchisee acknowledges and agrees that it is obligated to pay Royalty Fees to Franchisor, in accordance with Section 3.2 of this Agreement, on all Adjusted Gross Sales (as hereafter defined) from customers residing or operating within the Territory and any Adjacent Territory.
Franchisee acknowledges and agrees that neither the ability to service nor the grant of Franchisor's permission to service customers residing or operating in any Adjacent Territory affords Franchisee any right, title, or interest in or to such Adjacent Territory whatsoever, including the ability to do further business in the Adjacent Territory after it is granted to a third party (including any right to acquire such Adjacent Territory or any right of first refusal as to such Adjacent Territory).
If the right to operate in the Adjacent Territory is subsequently granted by Franchisor to another Craters & Freighters franchisee through the sale of a franchise, Franchisee agrees to, upon receipt of written notice from Franchisor, cease all promotional and advertising efforts within the Adjacent Territory, return to Franchisor all customer data and prospect information related to the Adjacent Territory, and cease providing products and services to customers in the Adjacent Territory.
Franchisee will use its best efforts to comply with Franchisor's requirements set forth herein, but Franchisor and Franchisee acknowledge and agree that customers residing or operating within the Adjacent Territory 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.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, an 'Adjacent Territory' is defined as an unsold territory next to a franchisee's designated territory. Craters & Freighters, at its sole discretion, may grant a franchisee the right to promote, advertise, and service customers in this adjacent territory.
While franchisees may be given the opportunity to operate in an Adjacent Territory, it's important to note that this does not grant them any ownership or future rights to that territory. If Craters & Freighters awards the Adjacent Territory to another franchisee, the original franchisee must cease all promotional activities, return customer data, and stop providing services in that area upon written notice.
Even when a franchisee is permitted to operate in an Adjacent Territory, customers in that territory have the freedom to choose any Craters & Freighters location. The franchisee also has to pay royalty fees to Craters & Freighters on all adjusted gross sales from customers in both their primary territory and any Adjacent Territory they are authorized to serve.