What is the geographic scope of the non-competition covenant for a Craters & Freighters franchisee after termination or expiration?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Item | Provision | Section in Franchise Agreement | Summary |
|---|---|---|---|
| r. | Non-competition covenants after the franchise is terminated or expires | Section 15.3 | You may not 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 you; 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 the Franchise Agreement. You may not divert, attempt to divert, or solicit business or customers of the Franchised Business or any Craters & Freighters Franchised Business to any Competitive Business, by direct or indirect inducement or otherwise. You may not attempt to endorse, or enter into any business competing in whole or in part with us in granting franchisors or licenses, or establishing joint ventures, for Competitive Businesses. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 36–44)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, after the franchise is terminated or expires, the franchisee is subject to certain non-competition covenants. Specifically, the franchisee cannot perform 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.
The geographic scope of this restriction includes (i) the Premises of the Franchised Business, (ii) within the Territory granted to you, 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 the Franchise Agreement.
In addition to the geographic restrictions, the franchisee is prohibited from diverting, attempting to divert, or soliciting business or customers of the Franchised Business or any Craters & Freighters Franchised Business to any Competitive Business, by direct or indirect inducement or otherwise. The franchisee also cannot attempt to endorse, or enter into any business competing in whole or in part with Craters & Freighters in granting franchisors or licenses, or establishing joint ventures, for Competitive Businesses. This prevents a former franchisee from leveraging their knowledge and experience gained from Craters & Freighters to directly compete with the franchise system.