What happens if a court finds a provision in the Craters & Freighters Franchise Agreement unreasonable?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Reasonableness of Restrictions. Restricted Person acknowledges and confirms that the length of the term and geographical restrictions contained in Section 5 above are fair and reasonable and not the result of overreaching, duress, or coercion of any kind. In the event a court of competent jurisdiction rules that any of the restrictions set forth in this Agreement is unenforceable by virtue of its scope or in terms of geographic area, type of business activity prohibited, and/or length of time, Restricted Person agrees to comply with any lesser restriction deemed enforceable by the court.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, if a court deems any restriction within the agreement unenforceable due to its scope, geographic area, type of prohibited business activity, or length of time, the Restricted Person (likely the franchisee or related party) agrees to comply with any lesser restriction that the court considers enforceable. This means that the original, broader restriction is replaced by a more limited one that the court finds reasonable.
This clause primarily relates to post-term competition restrictions, which prevent a franchisee from engaging in similar businesses after their franchise agreement ends. The agreement acknowledges that these restrictions must be fair and reasonable. By agreeing to comply with a lesser restriction deemed enforceable by the court, the franchisee accepts a modified version of the non-compete agreement, tailored to what the court considers acceptable.
For a prospective Craters & Freighters franchisee, this means that the non-compete clause isn't necessarily an all-or-nothing proposition. If a portion of it is found to be overly restrictive, a court can modify it to a more reasonable scope. This provides some protection to the franchisee, ensuring they aren't completely barred from future business opportunities, while still respecting the franchisor's legitimate interests in protecting its brand and market. However, the franchisee is still bound by the modified, lesser restriction, which could still impact their future business endeavors.