Does the termination of the Craters & Freighters franchise agreement relieve the franchisee of obligations 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
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, in the event of termination of the Franchise Agreement, the franchisee has specific obligations that must be fulfilled.
Specifically, Craters & Freighters requires the franchisee to immediately pay all monies owed to Craters & Freighters or its affiliates within ten days of termination or expiration. The franchisee must also discontinue all use of Craters & Freighters' trademarks, service marks, and trade names, and must cease operating in any manner that would 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 bearing Craters & Freighters' marks.
These stipulations ensure that upon termination, the franchisee does not continue to benefit from Craters & Freighters' brand recognition or intellectual property while still being obligated to settle any outstanding financial debts. This is a fairly standard practice in franchising, as franchisors typically want to protect their brand and ensure a clean break when a franchise agreement ends.