After the Crave Franchise Agreement terminates, what is the geographic restriction on a franchisee participating in a similar food service business?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
b. In further consideration for the disclosure to Covenantor of the Confidential Information and to protect the goodwill and unique qualities of the System, Covenantor further agrees and covenants that, upon the termination of the Franchise Agreement and continuing for two (2) years thereafter, Covenantor shall not, for Covenantor or through, on behalf of or in conjunction with any person or entity:
(i) divert, or attempt to divert, any business or customer of any Crave outlet or of other franchisees in the Crave System to any competitor, by direct or indirect inducement or otherwise, or
(ii) participate as an owner, partner, director, officer, employee, or consultant or serve in any other managerial, operational or supervisory capacity in any restaurant or food service business featuring menu items which are the same or substantially similar to those offered in the Crave System within ten (10) miles of the Designated Territory or any Crave outlet location.
c. The parties acknowledge and agree that each of the covenants contained herein are reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, a franchisee is restricted from participating in a similar food service business after the termination of the Franchise Agreement. Specifically, for two years following the termination, the franchisee cannot engage in a restaurant or food service business featuring menu items similar to those offered in the Crave system. This restriction applies if the business is within ten miles of either the franchisee's Designated Territory or any Crave outlet location.
This non-compete clause is designed to protect Crave's goodwill and confidential information. The agreement states that these restrictions are considered reasonable in terms of time, geographical area, and scope, ensuring they do not unduly restrain the franchisee while safeguarding Crave's business interests. The franchisee acknowledges that the disclosure of confidential information warrants these protective covenants.
In practical terms, a former Crave franchisee must avoid involvement in competitive food service businesses within the specified radius for two years after their franchise agreement ends. This includes roles as an owner, partner, director, officer, employee, or consultant. This restriction aims to prevent the franchisee from using knowledge gained during their time with Crave to unfairly compete against the brand. Franchisees should carefully consider these limitations before deciding to terminate their agreement, as they could significantly impact their ability to work in the food service industry in the near term.
It is important to note that these restrictions are mutual, as Crave also agrees to certain limitations during the term of the agreement, such as not developing or operating franchises within the franchisee's Development Area, subject to compliance with the agreement's terms. However, upon termination or expiration of the agreement, Crave and its affiliates regain the right to develop and operate Crave outlets within the Development Area, subject to any territorial rights and rights of first refusal granted to the franchisee.