Does Craters & Freighters exclusively reserve alternative channels of distribution such as the Internet?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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:
- 1.5.2 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).
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 may not develop its own individual location website or any other Internet presence.
Franchisor has developed a program in connection with an Affiliate of Franchisor which solicits and administers business accounts (each a "National Account" and, collectively, the "National Accounts") for packaging and shipping from businesses or institutions which have operations in two (2) or more territories within the System ("National Accounts Program"). The fulfillment of any such National Account will first be offered to the franchisee operating the Craters & Freighters Franchised Business in the territory in which the business is to be serviced pursuant to the corresponding National Account agreement established by Franchisor or its designee. Such franchisee is required to service the National Account according to the terms and conditions (including the price(s)) established in the corresponding National Account agreement. If such franchisee fails or refuses to service the National Account in accordance with such terms and conditions, or if Franchisor determines—in Franchisor's sole discretion—that Franchisee will not meet certain requirements to perform the work requested under the relevant corresponding National Account agreement, Franchisor reserves the right to perform the requested service(s) for the National Account or to assign the work to other franchisees, outside third-party vendors, or an Affiliate of Franchisor, in Franchisor's sole determination.
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 the exclusive right to sell products or services similar to those franchisees sell through any alternate distribution channels, including to National Accounts, whether within or outside the franchisee's territory. This means Craters & Freighters can utilize channels like the internet to sell directly to customers, even those within a franchisee's designated area. However, the franchisee may not develop its own individual location website or any other Internet presence.
This reservation of rights has significant implications for a Craters & Freighters franchisee. While franchisees are granted a territory, Craters & Freighters can compete within that territory through alternative channels. This could impact a franchisee's potential customer base and revenue. The franchisee is obligated to pay Royalty Fees to Franchisor on all Adjusted Gross Sales from customers residing or operating within the Territory and any Adjacent Territory.
The FDD also states that Craters & Freighters has developed a National Accounts Program to solicit and administer business accounts for packaging and shipping from businesses or institutions which have operations in two or more territories within the System. The fulfillment of any such National Account will first be offered to the franchisee operating the Craters & Freighters Franchised Business in the territory in which the business is to be serviced pursuant to the corresponding National Account agreement established by Franchisor or its designee. However, Craters & Freighters reserves the right to perform the requested service(s) for the National Account or to assign the work to other franchisees, outside third-party vendors, or an Affiliate of Franchisor, in Franchisor's sole determination.
Prospective franchisees should carefully consider these factors and how they might affect their business. It would be prudent to discuss with Craters & Freighters the specifics of their online sales strategy, the potential impact on franchisees, and the process for handling National Accounts within a franchisee's territory.