What is the meaning of 'Territory' in the Craters & Freighters Franchise Agreement?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 12: TERRITORY]
You will receive an exclusive territory ("Territory") in which to operate your Franchised Business. You are required to locate your Franchised Business within your Territory. Your Territory will be delineated by counties, and we have the exclusive right to determine the counties in your Territory. We offer two types of territories: one which will have a population under 1,000,000 people, and another which will have a population of 1,000,000 or more people. If you request, and we approve, a Territory with a population of more than 1,000,000 people, then you will be required to pay us a Supplemental Territory Fee equal to $0.015 per additional person in the Territory in addition to the Initial Franchise Fee of $45,000. All population
determinations will be based upon the latest United States Census information available for the various territories. You will not be entitled to any additional counties or an expansion of your geographic boundaries if the population decreases in your Territory.
You must generate the minimum annual revenue required for your Territory ("Minimum Performance Standards") in any year of the term of the Franchise Agreement. The following chart indicates the Minimum Performance Standards for years 1-3 of the Franchise Agreement:
| Year of Operation | Minimum Performance Standard | Minimum Monthly Royalty Fee |
|---|---|---|
| 1 | $200,000 | $0 |
| 2 | $400,000 | $1,667 |
| 3 | $510,000 | $2,125 |
You may only solicit business in the Territory for the purpose of obtaining customers who reside or operate within the Territory, and you cannot knowingly solicit business outside of the Territory. However, you are not required to verify that your customers reside or conduct business within the Territory. Accordingly, it is possible that you may provide services to customers who reside or conduct business outside of the Territory. At the same time, it is also possible that another Craters and Freighters Franchised Business may provide services to customers who reside or conduct business within the Territory.
You may be granted, in our sole discretion, express permission to promote and advertise your Franchised Business to customers in an unsold territory adjacent to your Territory ("Adjacent Territory"). If we permit you do to so, you must agree that if the Adjacent Territory is granted to another Craters & Freighters franchisee, you will, upon receipt of written notice from us, cease all promotional and advertising efforts within the Adjacent Territory, return to us all customer data and prospect information related to the Adjacent Territory, and cease providing products and services to customers in the Adjacent Territory.
You will not receive options, rights of first refusal, or similar rights to acquire additional franchises. You may relocate your Franchised Business to another location within your Territory upon our prior written approval.
We reserve the right, among others:
- (1) to own, franchise, or operate Craters & Freighters Franchised Businesses at any location outside of your Territory, regardless of the proximity to the boundaries of your Territory.
We will not establish within your Territory another franchisee or company-owned outlet which may also use our trademarks;
- (2) to use our trademarks and system to sell any products or services similar to those which you will sell, through any alternate channels of distribution within or outside of your Territory, including to national accounts.
This includes, but is not limited to, other channels of distribution such as television, mail order, catalog sales, wholesale to unrelated retail outlets, or over the Internet.
Source: Item 12 — TERRITORY (FDD pages 29–32)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, a franchisee will receive an exclusive territory in which to operate their franchised business. The territory will be delineated by counties, and Craters & Freighters has the exclusive right to determine the counties included. Franchisees are required to locate their business within this territory. Craters & Freighters offers two types of territories: one with a population under 1,000,000 people and another with a population of 1,000,000 or more people. If a franchisee requests and Craters & Freighters approves a territory with a population exceeding 1,000,000, the franchisee must pay a Supplemental Territory Fee of $0.015 per additional person, in addition to the initial franchise fee of $45,000. Population determinations are based on the latest United States Census information, and franchisees are not entitled to additional counties if the population decreases in their territory.
The Craters & Freighters franchisee may only solicit business within their territory, targeting customers who reside or operate there, and cannot knowingly solicit business outside of it. However, there's no requirement to verify customer locations, meaning franchisees may serve customers outside their territory, and vice versa. Franchisees may be granted permission to promote their business in an unsold adjacent territory, but must cease these efforts if that territory is granted to another franchisee. Craters & Freighters retains significant rights, including operating businesses outside the franchisee's territory, using trademarks through alternative channels, and selling similar services through other distribution methods, without compensating the franchisee.
The franchisee must meet minimum annual revenue requirements, known as "Minimum Performance Standards," for their territory. For example, in the first year of operation, the Minimum Performance Standard is $200,000, increasing to $400,000 in the second year and $510,000 in the third year. Failure to meet these standards may result in the reduction or modification of the franchisee's territory. These standards are distinct from financial performance representations. The franchisee may relocate within their territory with prior written approval from Craters & Freighters, but they do not have rights to acquire additional franchises or territories.