Does the Crave franchisor have a duty to exercise the powers conferred upon them in the agreement?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
4.1 Subject to the provisions of this Agreement, we grant to you the Development Rights, as described in Section 1.1. Notwithstanding any other provision of this Agreement, Development Rights under this Agreement may or may not, in our sole discretion, include the right to develop Franchised
14.2.1 You understand and acknowledge that the rights and duties set forth in this Agreement are personal to you, and that we have granted rights under this Agreement in reliance on the business skill, financial capacity and personal character of you and the Principals. Accordingly, neither you nor any Principal shall sell, assign (including but not limited to by operation of law, such as an assignment under bankruptcy or insolvency laws, in connection with a merger, divorce or otherwise), transfer, convey, give away, pledge, mortgage or otherwise encumber any direct or indirect interest in you, in this Agreement, in the Franchised Business and/or any of the Franchised Business' material assets (other than in connection with replacing, upgrading or otherwise dealing with such assets as required or permitted by this Agreement), without our prior written consent. Any purported assignment or transfer, by operation of law or otherwise, made in violation of this Agreement shall be null and void and shall constitute a material event of default under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
Based on the 2025 Crave Franchise Disclosure Document, the franchisor's duty to exercise powers conferred in the agreement is not explicitly detailed. However, the document does address the franchisor's discretion regarding development rights. Specifically, Section 4.1 states that the franchisor may or may not include the right to develop franchised businesses under the agreement, based on their sole discretion. This indicates that Crave retains some level of control over development rights.
Additionally, Section 14.2.1 outlines that the franchisee's rights and duties are personal, and Crave has granted rights based on the franchisee's business skill, financial capacity, and personal character. The franchisee needs prior written consent from Crave to sell, assign, transfer, or encumber any interest in the agreement, the franchised business, or its assets. Any attempt to do so without consent is considered a material default.
While the FDD excerpts do not explicitly state that Crave has a duty to exercise its conferred powers, the language used suggests that Crave retains considerable discretion and control over key aspects of the franchise agreement, such as development rights and franchisee transfers. A prospective franchisee should seek clarification from Crave regarding the specific circumstances under which the franchisor is obligated to exercise its powers and the potential implications for the franchisee's business operations.