What is the geographic scope of the post-term competition restriction for Craters & Freighters, in relation to the Franchised Business?
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 post-term competition restriction outlines specific geographic limitations. For two years after the franchise agreement's expiration, transfer, or termination, the franchisee is restricted from engaging in any Competitive Business. This restriction applies to performing services, consulting, engaging in, acquiring, lending money to, extending credit to, having any interest in, or being employed by a Competitive Business.
The geographic scope of this restriction includes three specific areas. First, the restriction applies directly at the Premises of the Franchised Business. Second, it extends to the entire Territory granted to the franchisee under the Franchise Agreement. Finally, the restriction covers a radius of ten miles around (a) the Premises of the Franchised Business, and (b) the premises of any other Craters & Freighters Franchised Business or any Craters & Freighters company-owned or Affiliate-owned outlet existing as of the date of the expiration, transfer, or termination of the Franchise Agreement.
This means that after leaving the Craters & Freighters system, a former franchisee cannot operate a similar business within these defined areas. This restriction aims to protect Craters & Freighters' market share and brand integrity by preventing former franchisees from directly competing in areas where Craters & Freighters has established a presence. The franchisee also acknowledges that these restrictions are fair and reasonable.