What section of the Craters & Freighters agreement contains the in-term restrictive covenants?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and Franchisee's owner(s) further acknowledge that these covenants and agreements relating to non-competition and non-solicitation are material inducements for Franchisor to enter into this Agreement, and that it is essential that Franchisee and Franchisee's owner(s) comply with the terms set forth herein.
- 15.2 In-Term Restrictive Covenants.
During the term of this Agreement, Franchisee and Franchisee's owner(s) may not, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership, or corporation:
- 15.2.1 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, executive, or principal of 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 ("Competitive Business") without the prior written consent of Franchisor.
Notwithstanding the foregoing, Franchisee will not be prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-the-counter market and represent five percent (5%) or less of that class of securities.
- 15.2.2 Divert, attempt to divert, or solicit business or customers of the Franchised Business, any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business, to any Competitive Business by direct or indirect inducement or otherwise.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the in-term restrictive covenants are found in section 15.2 of the franchise agreement. This section outlines the restrictions placed on the franchisee and their owners during the term of the agreement.
Specifically, section 15.2.1 prohibits the franchisee and their owners from being involved in any capacity with a Competitive Business that offers similar services to Craters & Freighters, such as shipping, packaging, crating, or freight forwarding. This restriction applies whether the involvement is direct or indirect, and it includes activities like performing services, consulting, engaging in, acquiring, lending money to, or being employed by a Competitive Business. An exception exists for owning securities in a Competitive Business if the securities are listed on a stock exchange or traded over-the-counter and represent 5% or less of that class of securities.
Furthermore, section 15.2.2 prevents the franchisee from diverting or soliciting business or customers of the Franchised Business, any Craters & Freighters Franchised Business, or any Craters & Freighters company-owned or Affiliate-owned business to any Competitive Business. These covenants are acknowledged by the franchisee and their owners as material inducements for Craters & Freighters to enter into the agreement, emphasizing the importance of compliance with these terms.