In Michigan, can Crave prevent a transfer of ownership if the proposed transferee is a competitor of Crave?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are requesting to add an owner, the proposed new owner must meet our criteria, including financial capability and that the new owner is not participating in a competing business, and the new ownership structure shall not change your majority ownership.
2. Covenants Not to Compete.
a. In order to protect the goodwill and unique qualities of the System, and in consideration for the disclosure to Covenantor of the Confidential Information, Covenantor further agrees and covenants that during the term of the Franchise Agreement, Covenantor shall not, for Covenantor or through, on behalf of or in conjunction with any person or entity:
(ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other 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.
Michigan requires you to receive this disclosure document at least 10 business days before the execution of any binding franchise or other agreement or the payment of any consideration, whichever occurs first.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, when adding a new owner, the proposed new owner must meet Crave's criteria, including not participating in a competing business. This implies that Crave can prevent a transfer of ownership to a competitor.
Furthermore, the document states that during the term of the Franchise Agreement, the franchisee (Covenantor) shall not participate as an owner, partner, director, officer, employee, consultant, or agent in any restaurant or food service business featuring menu items which are the same or substantially similar to those offered in the Crave system. This covenant not to compete reinforces Crave's ability to restrict ownership transfer to competitors.
In Michigan, the FDD states that if Crave does not deliver the Disclosure Document on time or if it contains a false or misleading statement, or a material omission, a violation of federal and state law may have occurred and should be reported to the Federal Trade Commission, Washington, DC. Michigan requires the franchisee to receive the disclosure document at least 10 business days before the execution of any binding franchise or other agreement or the payment of any consideration, whichever occurs first.