After termination of the Craters & Freighters agreement, does the termination relieve the franchisee of obligations to the franchisor existing at the time of termination?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.1 Required Actions. In the event of the termination of this Agreement, whether by reason of default, lapse of time, or other cause, Franchisee must immediately complete all of the following:
- 20.1.1 Payment of Monies Owed. Franchisee must pay to Franchisor, or any Affiliate of Franchisor, as the case may be, all monies owed to Franchisor or such Affiliate(s), respectively, within ten (10) days of the date on which the Agreement was terminated or expired.
- 20.1.2 Discontinue Use of Marks. Franchisee must discontinue the use of the Marks including, but not limited to, all of Franchisor's trademarks, service marks and trade names. Additionally, Franchisee must cease doing business under any name or in any manner that might provide the general public with the impression that Franchisee is operating a Craters & Freighters Franchised Business. At the option of Franchisor, within a reasonable period after the termination or expiration of this
Agreement, Franchisee must destroy or return to Franchisor any physical copies or electronic versions of items bearing or containing any of the Marks.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, termination of the Franchise Agreement does not relieve the franchisee of certain obligations. Specifically, the franchisee must pay all monies owed to Craters & Freighters, or any of its affiliates, within ten days of termination or expiration of the agreement.
Additionally, upon termination, the franchisee must immediately discontinue using Craters & Freighters' trademarks, service marks, and trade names. The franchisee must also stop operating in any manner that might suggest to the public that they are still a Craters & Freighters franchise. At Craters & Freighters' option, the franchisee must either destroy or return any physical or electronic materials containing Craters & Freighters' marks.
These obligations are fairly standard in franchising. Franchisees are typically required to settle outstanding debts and cease using the franchisor's intellectual property upon termination to protect the brand and ensure a clean break between the parties. Failing to meet these obligations could result in legal action from Craters & Freighters to recover outstanding payments or prevent unauthorized use of its brand assets.