What happens to the franchisee's obligations to Craters & Freighters that, by their nature, survive the expiration or termination of the franchise agreement?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Affiliate of Franchisor, or any designee of Franchisor, during the time period in which Franchisee is in default of this Agreement.
20. EFFECTS OF TERMINATION OR EXPIRATION.
- 20.1 Required Actions. In the event of the termination of this Agreement, whether by reason of default, lapse of time, or other cause, Franchisee must immediately complete all of the following:
- 20.1.1 Payment of Monies Owed. Franchisee must pay to Franchisor, or any Affiliate of Franchisor, as the case may be, all monies owed to Franchisor or such Affiliate(s), respectively, within ten (10) days of the date on which the Agreement was terminated or expired.
- 20.1.2 Discontinue Use of Marks. Franchisee must discontinue the use of the Marks including, but not limited to, all of Franchisor's trademarks, service marks and trade names. Additionally, Franchisee must cease doing business under any name or in any manner that might provide the general public with the impression that Franchisee is operating a Craters & Freighters Franchised Business. At the option of Franchisor, within a reasonable period after the termination or expiration of this
Agreement, Franchisee must destroy or return to Franchisor any physical copies or electronic versions of items bearing or containing any of the Marks.
- 20.1.3 Discontinue Use of Confidential Information and Trade Secrets. Franchisee must discontinue the use, in any manner, or for any purpose, directly or indirectly, of any of Franchisor's Confidential Information, Trade Secrets, or any other aspect of the System. At the option of Franchisor, Franchisee must destroy or return to Franchisor any physical copies or electronic versions of items containing any Confidential Information, Trade Secrets, or any other aspect of the System.
- 20.1.4 Discontinue Telephone Numbers. Franchisee must discontinue the use of all telephone numbers associated with the Franchised Business and transfer such numbers to Franchisor.
- 20.1.5 Compliance with Post-Term Restrictive Covenants. Franchisee and Franchisee's owner(s) must comply with the post-term restrictive covenants set forth in Section 15.3 of this Agreement.
- 20.2 Franchisor's Option to Purchase Assets. Upon the termination or expiration of this Agreement, Franchisor will have the option, but not the obligation, to purchase any and all of the assets used by Franchisee to operate the Franchised Business at a purchase price equal to market value.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters FDD, certain obligations survive the termination or expiration of the franchise agreement. Franchisees must pay all monies owed to Craters & Freighters or its affiliates within ten days of termination or expiration. They must also discontinue using Craters & Freighters' trademarks, service marks, and trade names, and must cease operating in a way that suggests they are still part of the Craters & Freighters franchise. At Craters & Freighters' option, franchisees must either destroy or return any physical or electronic materials bearing Craters & Freighters' marks.
Additionally, for two years post-termination, franchisees (and their owners) are restricted from engaging with any competitive business within the territory granted to them, within a ten-mile radius of their former location, or within a ten-mile radius of any other Craters & Freighters location. This includes performing services for, consulting for, being employed by, or having any financial interest in a competing business. Franchisees are also prohibited from diverting or soliciting business from Craters & Freighters' customers to a competitive business.
Furthermore, the confidentiality obligations regarding Craters & Freighters' confidential information and trade secrets remain in effect indefinitely after the termination or expiration of the agreement. This means franchisees must continue to protect and not disclose any proprietary information, methods, or processes related to the Craters & Freighters system, ensuring the continued protection of Craters & Freighters' intellectual property and business methods.