What obligations does a Craters & Freighters franchisee have upon termination or non-renewal of the Franchise Agreement, according to Sections 15.3, 20.1, and 20.2?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Item | Provision | Section in Franchise Agreement | Summary |
|---|---|---|---|
| r. | Non-competition covenants after the franchise is terminated or expires | Section 15.3 | You may not perform any services for, consult for, engage in, acquire, lend money to, extend credit to, have any interest in, or be employed as an officer, director, executive, or principal of any Competitive Business at or within the following areas: (i) at the Premises of the Franchised Business; (ii) within the Territory granted to you; or (iii) within a radius of ten (10) miles of (a) the Premises of the Franchised Business, or (b) the premises of any other Craters & Freighters Franchised Business or any Craters & Freighters company-owned or Affiliate-owned outlet then-existing as of the date of the expiration, transfer, or termination of the Franchise Agreement. You may not divert, attempt to divert, or solicit business or customers of the Franchised Business or any Craters & Freighters Franchised Business to any Competitive Business, by direct or indirect inducement or otherwise. You may not attempt to endorse, or enter into any business competing in whole or in part with us in granting franchisors or licenses, or establishing joint ventures, for Competitive Businesses. |
| o. | Franchisor's option to purchase franchisee's business | Section 20.2 | Upon the termination or expiration of the Franchise Agreement, we will have the option, but not the obligation, to purchase any and all of the assets used by you to operate the Franchised Business at a purchase price equal to net depreciated book value. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 36–44)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, Section 15.3 addresses non-competition covenants after the franchise is terminated or expires. Upon termination or expiration, a franchisee is restricted from engaging in any competitive business activities. Specifically, the franchisee cannot perform services for, consult for, engage in, acquire, lend money to, extend credit to, have any interest in, or be employed as an officer, director, executive, or principal of any Competitive Business. These restrictions apply (i) at the Premises of the Franchised Business; (ii) within the Territory granted to you; or (iii) within a radius of ten (10) miles of (a) the Premises of the Franchised Business, or (b) the premises of any other Craters & Freighters Franchised Business or any Craters & Freighters company-owned or Affiliate-owned outlet then-existing as of the date of the expiration, transfer, or termination of the Franchise Agreement. The franchisee is also prohibited from diverting or soliciting business or customers of the Franchised Business or any Craters & Freighters Franchised Business to any Competitive Business. They cannot endorse or enter into businesses that compete with Craters & Freighters by granting franchises or licenses, or establishing joint ventures, for Competitive Businesses.
Section 20.2 states that upon termination or expiration of the Franchise Agreement, Craters & Freighters has the option, but not the obligation, to purchase any and all of the assets used by the franchisee to operate the Franchised Business. The purchase price will be equal to the net depreciated book value of those assets.
While the excerpt mentions Section 20.2 regarding Craters & Freighters' option to purchase the franchisee's assets, it does not provide details regarding Section 20.1. A prospective franchisee should review the full Franchise Agreement and specifically ask Craters & Freighters about the obligations outlined in Section 20.1 to fully understand their responsibilities upon termination or non-renewal.