Can a Crave franchisee be in default under their Franchise Agreement for breaching the requirements described in Item 8?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right to negotiate purchase arrangements, including price terms, with suppliers for the benefit of our franchisees and the System, and when we deem appropriate. Currently, there are no purchasing or distribution cooperatives in the System. We do not provide material benefits (including, for example, granting new, additional or successor franchises) to you based on your purchase of particular products or services or your use of designated or approved suppliers. When deciding to grant new, additional or successor franchises, we consider many factors, including your compliance with the requirements described in this Item 8, the breach of which may be in default under your Franchise Agreement. Your compliance with the requirements of this Item 8 does not automatically give you the right to an additional, new or successor franchise.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 26–30)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, a franchisee's compliance with Item 8 requirements is a factor considered when Crave decides whether to grant new, additional, or successor franchises. A breach of these requirements may result in default under the Franchise Agreement. This means that franchisees must adhere to the restrictions on sources of products and services as outlined in Item 8 to remain in good standing with Crave.
Item 8 outlines several requirements for franchisees, including purchasing or leasing fixtures, furnishings, and equipment that conform to Crave's standards and specifications. Franchisees must also operate the franchised business in strict conformity with the methods, standards, and specifications prescribed in the Confidential Operations Manual. This includes maintaining sufficient supply and using only those food and beverage items, ingredients, products, materials, supplies, and paper goods that meet Crave's standards. Deviation from these standards without written consent is prohibited.
Crave also requires franchisees to purchase or finance their Food Truck from a designated supplier and to obtain required insurance coverages before construction of the Restaurant or taking delivery of the Food Truck. Franchisees must obtain food and beverage items, ingredients, supplies, materials, fixtures, furnishings, and equipment solely from suppliers who demonstrate the ability to meet Crave's standards. Failure to comply with these requirements, among others listed in Item 8, can lead to a franchisee being in default under their Franchise Agreement.