After the Crave Franchise Agreement terminates, for how long is the Covenantor restricted from 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.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, a Covenantor is subject to certain restrictions after the termination of the Franchise Agreement. Specifically, for a period of two years following the termination, the Covenantor is restricted from engaging in activities that could be considered competitive to the Crave system.
This includes restrictions on diverting business or customers from any Crave outlet to a competitor, as well as prohibitions on participating in any restaurant or food service business that features menu items substantially similar to those offered by Crave. This non-compete clause applies within a ten-mile radius of the Designated Territory or any Crave outlet location.
The FDD states that these covenants are considered reasonable in terms of time, geographical area, and scope, and are designed to protect the goodwill and unique qualities of the Crave system. This means that Crave believes these restrictions are necessary to prevent unfair competition and protect its business interests without unduly limiting the Covenantor's ability to work in the food service industry altogether. A Covenantor is defined as someone who may have access to confidential information, knowledge, know-how, techniques, contents of the Crave operations manual and other materials used in or related to the System and/or concerning the methods of operation of the System.
For a prospective Crave franchisee, this non-compete agreement is a crucial consideration. It means that upon leaving the Crave system, their ability to operate or work in a similar food service business will be restricted for two years within a defined geographical area. Franchisees should carefully evaluate whether this restriction aligns with their long-term career goals and plans.