Can a Restricted Person indirectly (through a family member) engage in a Competitive Business for Craters & Freighters?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
mployed as an officer, director, executive, or principal of any Competitive Business, as such term is defined in the Franchise Agreement.
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- Post-Term Competition Restriction. For a period of two (2) years after (a) Restricted Person's relationship with Franchisee ends; (b) the expiration or termination of the Franchise Agreement; or (c) the approved transfer of the Franchise Agreement to a new franchisee, whichever occurs first, Restricted Person will not, without Franchisor's consent, directly or indirectly (such as through an affiliate or a family member) 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 Franchisee under the Franchisee Agreement; 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.
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- Reasonableness of Restrictions. Restricted Person acknowledges and confirms that the length of the term and geographical restrictions contained in Section 5 above are fair and reasonable and not the result of overreaching, duress, or coercion of any kind. In the event a court of competent jurisdiction rules that any of the restrictions set forth in this Agreement is unenforceable by virtue of its scope or in terms of geographic area, type of business activity prohibited, and/or length of time, Restricted Person agrees to comply with any lesser restriction deemed enforceable by the court.
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- Enforcement. If Franchisor initiates a legal proceeding to enforce this Agreement and prevails in the proceeding, Restricted Person agrees to reimburse Franchisor for its enforcement costs and expenses, including attorneys' fees.
IN WITNESS WHEREOF, the Parties hereto executed, sealed, and delivered this Agreement on the Effective Date.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, a Restricted Person is prohibited from engaging in a Competitive Business both directly and indirectly, including through a family member. This restriction applies both during the term of the Franchise Agreement and for a period of two years after the relationship with the franchisee ends, the agreement expires or terminates, or the agreement is transferred to a new franchisee.
During the term of the agreement, a Restricted Person cannot perform services for, consult for, engage in, acquire, lend money to, extend credit to, have any interest in, or be employed by a Competitive Business without Craters & Freighters' prior written consent. The definition of a Competitive Business includes businesses offering shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, or freight forwarding services, or products or services similar to the franchised business.
After the agreement ends, the restrictions extend to specific geographic areas: the premises of the franchised business, the territory granted to the franchisee, and within a ten-mile radius of the franchised business or any other Craters & Freighters outlet. These restrictions are designed to protect Craters & Freighters' market and prevent unfair competition using knowledge gained during the franchise relationship. The FDD states that these covenants are material inducements for Craters & Freighters to enter into the agreement, emphasizing their importance.
These non-compete and non-solicitation clauses are typical in franchising to protect the brand and prevent franchisees from using proprietary information to compete, either during the franchise term or shortly after its conclusion. Prospective franchisees should carefully consider the scope and duration of these restrictions, as they could impact future business opportunities.