Does the Craters & Freighters franchise agreement prevent a franchisee from granting franchisors or licenses for Competitive Businesses after the expiration of the agreement?
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.
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 does not explicitly address whether a franchisee is restricted from granting franchises or licenses for Competitive Businesses after the agreement expires. However, the document does state that for two years after the expiration, transfer, or termination of the agreement, the franchisee and its owners are restricted from involvement with a Competitive Business. This includes performing services, consulting, engaging in, acquiring, lending money to, extending credit to, having any interest in, or being employed by a Competitive Business within specific geographic areas.
Specifically, these geographic restrictions apply (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.
While the FDD excerpts do not directly address the granting of franchises or licenses, the broad restrictions on being involved with a Competitive Business after the agreement ends suggest that granting franchises or licenses for such businesses would likely be prohibited, as it would constitute having an interest in or engaging in a Competitive Business. A prospective franchisee should seek clarification from Craters & Freighters on this specific point to fully understand the scope of post-term competitive restrictions.