Is Crave allowed to merge with a business that directly competes with Crave businesses?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
Nothing in the Franchise Agreement will prohibit us from: (1) operating and/or franchising others to operate restaurants or food trucks identified in whole or in part by the Proprietary Marks and/or utilizing the System in the Designated Territory that are located in gas stations or convenience stores; transportation facilities, including airports, train stations, subways and rail and bus stations; military bases and government offices; sports facilities, including stadiums and arenas; amusement parks, zoos and convention centers; car and truck rest stops and travel centers; educational facilities; recreational theme parks; hospitals; hotels; business or industrial foodservice venues; venues in which foodservice is or may be provided by a master concessionaire or contract foodservice provider; Indian reservations; casinos; or any similar captive market location not reasonably available to you (a "Non-Traditional Site"); (2) awarding national, regional or local licenses to third parties to sell products under the Proprietary Marks in foodservice facilities primarily identified by the third party's trademark; (3) merchandising and distributing products identified by the Proprietary Marks in the Designated Territory through any method or channel of distribution other than through the operation of a restaurant or food truck, including distribution of products (including any proprietary products) through grocery stores, club stores and similar stores; (4) selling and distributing products identified by the Proprietary Marks in the Designated Territory to restaurants other than Restaurants identified by the Proprietary Marks, regardless of whether the restaurants are licensed to use the Proprietary Marks in connection with their retail sales or not; (5) selling products and services through other channels of distribution, including the internet, wholesale, mail order and catalog; (6) developing and/or owning other franchise systems for the same or similar products and services using trade names and trademarks other than the Proprietary Marks; and (7) purchasing, being purchased by, merging or combining with businesses that we deem to offer direct competition to Crave businesses. We are not required to pay you any consideration if we exercise any right specified above in the Designated Territory.
Source: Item 12 — TERRITORY (FDD pages 42–46)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave is permitted to merge with businesses that directly compete with Crave businesses. Specifically, Crave retains the right to purchase, be purchased by, merge, or combine with businesses that it deems to offer direct competition to Crave businesses. This clause provides Crave with significant flexibility in its business operations and future growth strategies.
For a prospective franchisee, this means that Crave could potentially merge with a competitor, which might alter the competitive landscape. While the FDD does not elaborate on how such a merger would specifically impact existing franchisees, it is important to recognize that Crave is not required to provide any compensation to franchisees if it exercises this right. This lack of required compensation highlights a potential risk for franchisees, as a merger with a competitor could dilute their market share or change the brand's strategic direction without any direct benefit to them.
This type of clause is not uncommon in franchise agreements, as franchisors often seek to maintain control over their brand's evolution and market positioning. However, it underscores the importance of due diligence for potential franchisees. Understanding the franchisor's rights and potential actions, such as mergers with competitors, is crucial for assessing the long-term viability and risks associated with the franchise investment. Prospective franchisees should discuss this clause with Crave to understand the potential implications and how Crave would manage any conflicts of interest that may arise from such a merger.