What is the duration of the post-term competition restriction for Craters & Freighters if the Franchise Agreement is terminated?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
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' 2025 Franchise Disclosure Document, franchisees are subject to post-term competition restrictions. Specifically, for a period of two years after the termination of the Franchise Agreement, the franchisee and their owners are restricted from engaging in any Competitive Business.
This restriction prevents the franchisee from performing services for, consulting for, engaging in, acquiring, lending money to, extending credit to, having any interest in, or being employed as an officer, director, executive, or principal of any Competitive Business. This restriction applies (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.
The non-compete agreement also restricts franchisees 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 by direct or indirect inducement or otherwise. This means a former franchisee cannot actively try to take customers away from the Craters & Freighters system to a competing business.
These restrictions are in place to protect Craters & Freighters' market share, customer relationships, and overall brand integrity. Such post-term non-compete clauses are common in franchising to prevent franchisees from using the franchisor's proprietary information and business model to compete against the system after the franchise agreement ends.