What triggers the start of the post-term competition restriction period for Craters & Freighters?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
For a period of two (2) years after (a) Restricted Person's relationship with Franchisee ends; (b) the expiration or termination of the Franchise Agreement; or (c) the approved transfer of the Franchise Agreement to a new franchisee, whichever occurs first, 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 at or within the following areas: (i) at the Premises of the Franchised Business; (ii) within the Territory granted to Franchisee under the Franchisee Agreement; or (iii) within a radius of ten (10) miles of (a) the Premises of the Franchised Business, or (b) the premises of any other Craters & Freighters Franchised Business or any Craters & Freighters company-owned or Affiliate-owned outlet then-existing as of the date of the expiration, transfer, or termination of the Franchise Agreement.
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- Reasonableness of Restrictions. Restricted Person acknowledges and confirms that the length of the term and geographical restrictions contained in Section 5 above are fair and reasonable and not the result of overreaching, duress, or coercion of any kind. In the event a court of competent jurisdiction rules that any of the restrictions set forth in this Agreement is unenforceable by virtue of its scope or in terms of geographic area, type of business activity prohibited, and/or length of time, Restricted Person agrees to comply with any lesser restriction deemed enforceable by the court.
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- Enforcement. If Franchisor initiates a legal proceeding to enforce this Agreement and prevails in the proceeding, Restricted Person agrees to reimburse Franchisor for its enforcement costs and expenses, including attorneys' fees.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the two-year post-term competition restriction begins after whichever of these events occurs first: the end of the Restricted Person's relationship with the franchisee, the expiration or termination of the Franchise Agreement, or the approved transfer of the Franchise Agreement to a new franchisee. This restriction prevents the Restricted Person from engaging in or being associated with a Competitive Business within specific areas. These areas include the premises of the franchised business, the territory granted to the franchisee, or within a 10-mile radius of the franchised business or any other Craters & Freighters outlet.
This non-compete clause is a standard practice in franchising to protect the brand and the existing franchisees from unfair competition by former franchisees who may have gained knowledge and experience operating within the Craters & Freighters system. The term 'Restricted Person' is defined within the agreement and typically includes the franchisee and their owners, but it is important to review the full agreement to understand who is specifically bound by these restrictions.
Craters & Freighters's enforcement of these restrictions could significantly impact a franchisee's future business opportunities after leaving the system. The franchisee is agreeing that the restrictions are fair and reasonable. However, if a court finds any restriction unenforceable, the franchisee agrees to comply with any lesser restriction deemed enforceable by the court. If Craters & Freighters has to initiate a legal proceeding to enforce the agreement and wins, the Restricted Person must cover Craters & Freighters's enforcement costs, including attorney's fees.