What is the duration of the post-term competition restriction for Craters & Freighters if the Franchise Agreement expires?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
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, 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 this 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 this Agreement.
15.3.2 Divert, attempt to divert, or solicit business or customers of the Franchised Business, any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business, to any Competitive Business by direct or indirect inducement or otherwise.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to Craters & Freighters's 2025 Franchise Disclosure Document, if the Franchise Agreement expires, the franchisee and their owners are subject to a post-term restrictive covenant for a period of two years. This means that for two years following the expiration of the agreement, the franchisee and their owners are restricted from engaging in certain competitive activities.
Specifically, the franchisee and their owners cannot perform 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. This restriction applies to activities (i) at the Premises of the Franchised Business; (ii) within the Territory granted to Franchisee under this 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 this Agreement.
Additionally, the franchisee and their owners are prohibited from diverting, attempting to divert, or soliciting business or customers of the Franchised Business, any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business to any Competitive Business through direct or indirect inducement or otherwise. This comprehensive restriction aims to protect Craters & Freighters's business interests and prevent former franchisees from leveraging their knowledge and resources gained during the franchise term to compete against the brand shortly after the agreement ends.
These restrictions are acknowledged by the franchisee as material inducements for Craters & Freighters to enter into the agreement, highlighting the importance of compliance with these terms. The franchisee also acknowledges that the restrictions are fair and reasonable. However, the document also states that should a court deem any restriction unenforceable, the franchisee agrees to comply with any lesser restriction deemed enforceable by the court.