What happens to a Craters & Freighters franchisee's obligations during the Interim Period?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
- 2.6 Interim Period.
If Franchisee does not sign a Successor Franchise Agreement prior to the date on which the Initial Term of this Agreement expires and Franchisee continues to accept the benefits of this Agreement after the expiration of this Agreement, then at Franchisor's option, this Agreement may be treated either as (i) expired as of the date of expiration with Franchisee then operating without a license to do so and in violation of Franchisor's rights; or (ii) continued on a month-to-month basis ("Interim Period") until one party provides the other with written notice of such party's intent to terminate the Interim Period, in which case the Interim Period will terminate thirty (30) days after receipt of the notice to terminate the Interim Period.
In the latter case, all of Franchisee's obligations will remain in full force and effect during the Interim Period as if this Agreement had not expired, and all obligations and restrictions imposed on Franchisee upon expiration of this Agreement will be deemed to take effect upon termination of the Interim Period.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the franchisee's obligations remain in full force and effect during the Interim Period, as if the agreement had not expired. The Interim Period occurs if a franchisee does not sign a Successor Franchise Agreement before the initial term expires, but continues to operate the franchise. Craters & Freighters has the option to treat the agreement as expired, meaning the franchisee is operating without a license, or to continue it on a month-to-month basis until either party provides written notice to terminate, with termination occurring thirty days after the notice is received.
This means that during the Interim Period, the franchisee must continue to meet all requirements outlined in the original franchise agreement, such as paying royalties and adhering to Craters & Freighters's operational standards. All obligations and restrictions imposed on the franchisee upon the expiration of the agreement will take effect upon the termination of the Interim Period.
For a prospective Craters & Freighters franchisee, this clause highlights the importance of either renewing the franchise agreement on time or understanding that all original obligations continue on a month-to-month basis if operations continue past the original term. It also emphasizes the need to be aware of the implications and restrictions that come into effect once the Interim Period is terminated, as these are the same as if the agreement had expired initially.