What options does Craters & Freighters have regarding the franchisee's assets upon termination or expiration 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 Franchise Disclosure Document, upon termination or expiration of the franchise agreement, the franchisee must fulfill certain obligations. The franchisee is required to pay all outstanding monies owed to Craters & Freighters or its affiliates within ten days of termination or expiration. Additionally, the franchisee must immediately cease using Craters & Freighters' trademarks, service marks, and trade names, and discontinue any business practices that might suggest they are still operating a Craters & Freighters franchise.
Craters & Freighters has the option to require the franchisee to either destroy or return any physical or electronic materials that bear the company's marks. This ensures that the franchisee does not continue to benefit from the brand's reputation after the agreement ends.
For a period of two years post-termination, expiration, or transfer, the franchisee is restricted from engaging in any competitive business activities within the territory granted under the agreement or within a ten-mile radius of the former Craters & Freighters location or any other existing Craters & Freighters outlet. This includes performing services for, consulting for, or having any interest in a competitive business. The franchisee is also prohibited from diverting or soliciting business or customers away from Craters & Freighters to any competitive business.