After the Crave Franchise Agreement terminates, for how long is a franchisee prohibited from diverting business from Crave outlets to a competitor?
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 franchisee is restricted from diverting business from Crave outlets to a competitor for a period of two years after the termination of the Franchise Agreement. Specifically, the franchisee cannot directly or indirectly solicit or attempt to divert business from any Crave outlet or other franchisees within the Crave system to a competitor.
This restriction is put in place to protect the goodwill and unique qualities of the Crave system, as well as to safeguard the confidential information disclosed to the franchisee during the term of the agreement. The FDD states that this non-compete agreement is in consideration for the disclosure of confidential information to the franchisee.
Additionally, during this two-year period, the franchisee is also prohibited from participating in any restaurant or food service business that features menu items that are the same or substantially similar to those offered in the Crave system. This restriction applies if the business is located within ten miles of the Designated Territory or any Crave outlet location. This prevents a former franchisee from directly competing with Crave using similar offerings and taking advantage of their prior experience with the brand.
The Crave FDD acknowledges that these covenants are reasonable limitations regarding time, geographical area, and scope of activity. They are designed to protect the goodwill and business interests of the franchisor without imposing a greater restraint than necessary.