What is a Restricted Person prohibited from doing regarding a Competitive Business during the term of the Craters & Freighters Franchise Agreement?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
While the Franchise Agreement is in effect and Restricted Person continues in Restricted Person's role with Franchisee, 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, as such term is defined in the Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, a Restricted Person is prohibited from certain activities related to a Competitive Business during the term of the Franchise Agreement. Specifically, without Craters & Freighters's consent, a Restricted Person cannot directly or indirectly 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. This restriction applies while the Franchise Agreement is in effect and the Restricted Person continues their role with the franchisee.
This in-term competition restriction is designed to protect Craters & Freighters's interests by preventing individuals with knowledge of their operations and confidential information from working for or having a financial interest in competing businesses. The term "Competitive Business" refers to any business that offers 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.
This restriction is fairly standard in franchising to protect the brand and prevent franchisees or related parties from using the franchisor's knowledge against them during the term of the agreement. It is important to note that this restriction requires Craters & Freighters's consent, implying that there may be circumstances under which such activities could be permitted. A prospective franchisee should clarify with Craters & Freighters what those circumstances might be.
It is important for potential franchisees and any Restricted Persons to fully understand the scope and implications of this restriction before entering into a franchise agreement with Craters & Freighters. They should seek legal counsel to ensure they understand their obligations and rights under the agreement.