What is a Craters & Freighters franchisee's obligation regarding customers within their territory?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
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").
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 acknowledges and agrees that neither the ability to service nor the grant of Franchisor's permission to service customers residing or operating in any Adjacent Territory affords Franchisee any right, title, or interest in or to such Adjacent Territory whatsoever, including the ability to do further business in the Adjacent Territory after it is granted to a third party (including any right to acquire such Adjacent Territory or any right of first refusal as to such Adjacent Territory).
If the right to operate in the Adjacent Territory is subsequently granted by Franchisor to another Craters & Freighters franchisee through the sale of a franchise, Franchisee agrees to, upon receipt of written notice from Franchisor, cease all promotional and advertising efforts within the Adjacent Territory, return to Franchisor all customer data and prospect information related to the Adjacent Territory, and cease providing products and services to customers in the Adjacent Territory.
Franchisee will use its best efforts to comply with Franchisor's requirements set forth herein, but Franchisor and Franchisee acknowledge and agree that customers residing or operating within the Adjacent 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 from Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to Craters & Freighters's 2025 Franchise Disclosure Document, franchisees are expected to focus their efforts on attracting and serving customers within their designated territory. This means a franchisee should primarily solicit business within their territory to gain customers who reside or operate there. However, Craters & Freighters franchisees are not required to verify that their customers reside or conduct business within their territory.
Craters & Freighters, its affiliates, or designees may also market on behalf of the system within a franchisee's territory as part of their business strategy. Franchisees must follow the franchisor's policies on marketing outside their territory and cooperate with neighboring franchisees, as outlined in the operations manuals. Customers have the freedom to choose any Craters & Freighters outlet, even those outside the franchisee's territory, and advertising promotions may inadvertently direct customers to other outlets.
Craters & Freighters may grant a franchisee the right to promote and service customers in an unsold territory adjacent to their own, called an "Adjacent Territory." The franchisee is obligated to pay royalty fees on all adjusted gross sales from customers in both their territory and any adjacent territory. However, the right to service customers in an adjacent territory does not give the franchisee any ownership or rights to that territory. If Craters & Freighters grants the adjacent territory to another franchisee, the original franchisee must cease all promotional efforts there, return customer data, and stop providing services in that area. Customers in the adjacent territory are free to choose any Craters & Freighters outlet.