What is the franchisee required to do to maintain exclusivity in the Crave Development Area?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4.2 Provided you are in full compliance with all the terms and conditions of this Agreement, including without limitation your development obligations described in Section 3.2 and the Minimum Performance Schedule, and you are in full compliance with all of your obligations under all franchise agreements executed pursuant to this Agreement, then during the term of this Agreement neither we nor any of our affiliates will develop or operate or grant franchises for the development or operation of Franchised Businesses within the Development Area, except the franchises that are granted to you pursuant to this Agreement and except as otherwise expressly provided in this Agreement.
- 4.3 Upon the termination or expiration of this Agreement, we and our affiliates shall have the right to develop and operate, and to grant to others development rights and franchises to develop and operate, dedicated Crave outlets within the Development Area subject only to the territorial rights granted to you with respect to Franchised Businesses operated by you pursuant to the Franchise Agreements and subject, further, to the right of first refusal described in Section 6 below.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, a franchisee's exclusivity within their Development Area is contingent upon their adherence to the terms and conditions of the agreement. Specifically, the franchisee must fulfill their development obligations as outlined in Section 3.2, which likely includes milestones for opening new locations within the designated timeframe. They must also adhere to the Minimum Performance Schedule, ensuring a certain number of franchise agreements are in place and operational within the Development Area by specified dates. Furthermore, the franchisee must be in full compliance with all obligations under all franchise agreements executed pursuant to the Development Agreement.
If the franchisee meets these requirements, Crave agrees not to develop, operate, or grant franchises to others within the Development Area during the term of the agreement. This protection extends to Crave and its affiliates, preventing them from directly competing with the franchisee's dedicated Crave outlets. However, this exclusivity is not absolute. Crave retains the right to operate or franchise dedicated Crave outlets at Non-Traditional Sites within the Development Area, subject to a right of first refusal for the franchisee.
Upon termination or expiration of the Development Agreement, Crave and its affiliates regain the right to develop and operate franchises within the Development Area, subject to any territorial rights granted to the franchisee for their existing Franchised Businesses. This means that while the franchisee maintains exclusivity during the agreement's term by meeting their obligations, this protection ceases upon the agreement's end, potentially opening the door for increased competition from Crave or other franchisees in the same area.
It is important for prospective Crave franchisees to carefully review Section 3.2, the Minimum Performance Schedule, and Section 6 of the Development Agreement to fully understand their development obligations, the specific milestones they must meet, and the conditions under which their exclusivity is maintained or can be affected. Understanding these details is crucial for making informed decisions about the potential risks and benefits of investing in a Crave franchise.