During the term of the Craters & Freighters agreement, can a franchisee own stock in a Competitive Business?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, during the term of the agreement, franchisees are generally restricted from having any interest in a Competitive Business, which includes businesses offering similar services such as shipping, packaging, crating, receiving and delivery, storage, transportation, moving, logistics, blanket wrap, or freight forwarding.
However, there is an exception to this restriction. A Craters & Freighters franchisee is permitted to own securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter, provided that the franchisee's ownership represents five percent (5%) or less of that class of securities.
This exception allows franchisees to make minor investments in publicly traded companies that might be considered competitive without violating the franchise agreement. This clause aims to prevent franchisees from actively engaging with or having a significant stake in competing businesses while still allowing for minor investment opportunities.