Upon termination or expiration of the Craters & Freighters agreement, does the franchisor have an obligation to purchase the franchisee's assets?
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)
Based on the 2025 Franchise Disclosure Document, the Craters & Freighters franchise agreement outlines required actions upon termination or expiration, but it does not specify any obligation for Craters & Freighters to purchase the franchisee's assets.
Specifically, the franchisee is required to fulfill certain obligations, such as paying all monies owed to Craters & Freighters or its affiliates within ten days of termination or expiration. Additionally, the franchisee must discontinue using Craters & Freighters' marks and cease operating in a manner that suggests they are still part of the Craters & Freighters system. The franchisee may also be required to destroy or return any materials bearing Craters & Freighters' marks.
Because the FDD does not explicitly state whether Craters & Freighters is obligated to purchase a franchisee's assets upon termination or expiration of the franchise agreement, prospective franchisees should seek clarification from Craters & Freighters regarding this matter. Understanding the franchisor's position on asset repurchase is crucial for financial planning and risk assessment before entering into a franchise agreement.