Does the Craters & Freighters franchise agreement prevent a franchisee from establishing joint ventures for Competitive Businesses after the expiration of the agreement?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
raters & Freighters company-owned or Affiliate-owned business, to any Competitive Business by direct or indirect inducement or otherwise.
- 15.3 Post-Term Restrictive Covenants. 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.
- 15.3.3 Attempt to endorse, or enter into any business competing in whole or in part with Franchisor in granting franchisors or licenses, or establishing joint ventures, for Competitive Businesses.
- 15.4 Reasonableness of Restrictions. Franchisee and Franchisee'
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the franchise agreement includes post-term restrictive covenants that limit a franchisee's ability to engage in competitive business activities after the agreement expires, is transferred, or is terminated. Specifically, for a period of two years, the franchisee and their owners cannot directly or indirectly be involved with a Competitive Business. This includes performing services, consulting, engaging in, acquiring, lending money, extending credit, having any interest in, or being employed as an officer, director, executive, or principal.
These restrictions apply within specific geographic areas: the premises of the former franchised business, the territory granted to the franchisee, or within a 10-mile radius of the former business location or any other existing Craters & Freighters outlet. The agreement also prohibits the franchisee from diverting or soliciting business or customers from the Craters & Freighters system to any Competitive Business.
These covenants acknowledge that non-competition and non-solicitation agreements are material inducements for Craters & Freighters to enter into the franchise agreement. Franchisees and their owners must comply with these terms. The restrictions are designed to protect Craters & Freighters's market and customer base by preventing former franchisees from using their knowledge and experience gained during the franchise term to unfairly compete with the system after their agreement ends.