Within the Craters & Freighters agreement, what is the geographic scope of the post-term restrictive covenant regarding Competitive Businesses?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
For a period of two (2) years after the expiration, transfer, or termination of this Agreement, Franchisee and its owner(s) may not, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership, or corporation:
- 15.3.1 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 Competitive Business at or within the following areas: (i) at the Premises of the Franchised Business; (ii) within the Territory granted to Franchisee under this 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 this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the post-term restrictive covenant prevents a franchisee from engaging in a Competitive Business within certain geographic areas for two years after the franchise agreement expires, is transferred, or is terminated. This restriction applies to the franchisee, as well as the franchisee's owners. A Competitive Business is defined as one 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.
The geographic scope of the restriction includes three specific areas. First, the restriction applies at the physical Premises of the Franchised Business. Second, it extends to the Territory granted to the franchisee under the Franchise Agreement. Finally, the restriction covers an area within a ten-mile radius 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.
This means that after leaving the Craters & Freighters system, a former franchisee cannot operate or be involved with a competing business within their former territory, at their old business location, or within a 10-mile radius of any Craters & Freighters location. This is designed to protect Craters & Freighters' market share and brand reputation. Prospective franchisees should carefully consider these restrictions, as they could limit their business opportunities after the franchise agreement ends.