What kind of risk does the Craters & Freighters franchisee acknowledge is involved in the franchised business venture?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
ng outside the Territory, if any, and on cooperating with neighboring Craters & Freighters franchisees, as the same may be set forth from time to time in the Operations Manuals. Franchisee acknowledges and agrees that customers residing or operating within the Territory are entitled the freedom to choose any Craters & Freighters outlet which they believe will best serve them and their needs, and that they may seek service of the type provided by Franchisee from others, including another Craters & Freighters outlet located outside of Franchisee's Territory. Franchisee further acknowledges and agrees that advertising promotions conducted by third parties upon request by Franchisor may inadvertently refer customers residing or operating within the Territory to a Craters & Freighters outlet outside of the Territory.
- 1.4 Servicing in Unsold Adjacent Territories. Franchisor may grant Franchisee the right, in Franchisor's sole determination, to promote and advertise the Franchised Business to customers, or to service customers, in an unsold territory adjacent to the Territory ("Adjacent Territory"). Franchisee acknowledges and agrees that it is obligated to pay Royalty Fees to Franchisor, in accordance with Section 3.2 of this Agreement, on all Adjusted Gross Sales (as hereafter defined) from customers residing or operating within the Territory and any Adjacent Territory. Franchisee acknowledges and agrees that neither the ability to service nor the grant of Franchisor's permission to service customers residing or operating in any Adjacent Territory affords Franchisee any right, title, or interest in or to such Adjacent Territory whatsoever, including the ability to do further business in the Adjacent Territory after it is granted to a third party (including any right to acquire such Adjacent Territory or any right of first refusal as to such Adjacent Territory).
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters FDD, a franchisee acknowledges several risks associated with the non-exclusive nature of the franchise. Craters & Freighters retains the right to operate or franchise other outlets outside the franchisee's territory. This means that while Craters & Freighters will not establish another franchisee or company-owned outlet within the franchisee's territory, they can set up outlets nearby, potentially impacting the franchisee's business.
Additionally, Craters & Freighters can use the brand and system to sell similar products or services through other distribution channels, including to National Accounts, within or outside the franchisee's territory. This could create competition for the franchisee from the franchisor itself. Customers within the franchisee's territory have the freedom to choose any Craters & Freighters outlet, even those outside the territory, which could divert business away from the franchisee's location.
Furthermore, advertising promotions by third parties, initiated by Craters & Freighters, may inadvertently direct customers within the franchisee's territory to other Craters & Freighters outlets. The franchisee also acknowledges that even if granted the right to service an adjacent territory, this right is not permanent and can be revoked if Craters & Freighters grants that territory to another franchisee. These factors highlight the importance of a franchisee's ability to effectively compete within their territory and adapt to potential competition from both within and outside the Craters & Freighters franchise system.