Can a Craters & Freighters franchisee solicit business outside of their designated territory?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
at controls, is controlled by, or is in common control with, Franchisor or Franchisee.
- 1.3 Operation of Franchised Business Limited to Territory. Franchisee agrees to devote its best efforts to identifying, attracting, and serving customers who reside or operate within the Territory. Therefore, except as otherwise permitted herein or as approved in advance and in writing by Franchisor, Franchisee will solicit business only in the Territory for the purpose of obtaining customers who reside or operate within the Territory, and Franchisee will not knowingly solicit business outside of the Territory. However, Franchisee is not required to verify that customers to the Franchised Business reside or conduct business within the Territory. Franchisee acknowledges and agrees that Franchisor, an Affiliate of Franchisor, or designee of Franchisor, as part of Franchisor's business strategy, may advertise or market on behalf of the System in the Territory. Franchisee agrees to abide by Franchisor's then current policies on marketing outside the Territory, if any, and on cooperating with neighboring Craters & Freighters franchisees, as the same may be set forth from time to time in the Operations Manuals. Franchisee acknowledges and agrees that customers residing or operating within the Territory are entitled the freedom to choose any Craters & Freighters outlet which they believe will best serve them and their needs, and that they may seek service of the type provided by Franchisee from others, including another Craters & Freighters outlet located outside of Franchisee's Territory. Franchisee further acknowledges and agrees that advertising promotions conducted by third parties upon request by Franchisor may inadvertently refer customers residing or operating within the Territory to a Craters & Freighters outlet outside of the Territory.
- 1.4 Servicing in Unsold Adjacent Territories. Franchisor may grant Franchisee the right, in Franchisor's sole determination, to promote and advertise the Franchised Business to customers, or to service customers, in an unsold territory adjacent to the Territory ("Adjacent Territory").
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, franchisees are generally expected to focus their efforts on attracting and serving customers within their designated territory. While franchisees are expected to primarily solicit business within their territory, they are not required to verify that each customer resides or operates within that specific area.
However, the Craters & Freighters franchise agreement does allow for some exceptions. A franchisee may solicit business outside their territory if they obtain prior written approval from Craters & Freighters. Additionally, Craters & Freighters may grant a franchisee the right to promote and service customers in an unsold territory adjacent to their own, referred to as an "Adjacent Territory." In such cases, the franchisee is obligated to pay royalty fees on sales generated from the Adjacent Territory.
It's important to note that even with permission to service an Adjacent Territory, the franchisee does not gain any ownership rights or exclusive rights to that territory. If Craters & Freighters awards the Adjacent Territory to another franchisee, the original franchisee must cease all promotional activities and services in that area, and return any customer data related to it. This highlights the importance of understanding the terms and limitations of the franchise agreement regarding territorial rights and business solicitation.