Does the Craters & Freighters post-term restrictive covenant prevent soliciting customers of other Craters & Freighters franchises?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
raters & Freighters company-owned or Affiliate-owned business, to any Competitive Business by direct or indirect inducement or otherwise.
- 15.3 Post-Term Restrictive Covenants. For a period of two (2) years after the expiration, transfer, or termination of this Agreement, Franchisee and its owner(s) may not, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership, or corporation:
- 15.3.1 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, e
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the post-term restrictive covenants do address the solicitation of customers of other Craters & Freighters franchises. Specifically, for a period of two years after the franchise agreement expires, is transferred, or is terminated, the franchisee cannot divert, attempt to divert, or solicit business or customers of any Craters & Freighters Franchised Business to any Competitive Business. This restriction applies to direct or indirect inducement.
This means that after leaving the Craters & Freighters system, a former franchisee is restricted from actively pursuing or taking actions that would cause customers of other Craters & Freighters franchises to move their business to a competing business. This restriction is in place to protect the existing franchisees and the overall Craters & Freighters brand.
However, the restriction applies only to soliciting for a Competitive Business. It does not appear to prevent a former franchisee from soliciting for a new Craters & Freighters franchise or their own independent business that is not considered a Competitive Business. It also does not prohibit accepting business from customers of other Craters & Freighters franchises who seek out the former franchisee of their own accord.
It is important for prospective franchisees to fully understand the scope and limitations of these post-term restrictive covenants, as they can significantly impact their business activities after leaving the Craters & Freighters system. Franchisees should seek legal counsel to fully understand the implications of these restrictions in their specific circumstances.