Does the Crave non-compete agreement apply if I operate a competitive business indirectly through another person?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
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:
(i) divert, or attempt to divert, any business or customer of any Crave outlet or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise, or
(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.
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 the 2025 Crave Franchise Disclosure Document, the non-compete agreement extends to activities conducted indirectly through another person or entity. During the term of the Franchise Agreement, a franchisee cannot divert business from any Crave outlet to a competitor, whether through direct or indirect means. Additionally, franchisees are prohibited from participating as an owner, partner, director, officer, employee, consultant, or agent in any food service business featuring similar menu items to Crave, regardless of whether their involvement is direct or indirect.
Post-termination, for a period of two years, the franchisee is restricted from diverting business or participating in a similar food service business within ten miles of their designated territory or any Crave outlet location. This restriction also applies if the franchisee acts through another person or entity. These covenants are acknowledged as reasonable to protect Crave's goodwill and business interests.
Specifically, the agreement states that neither the franchisee nor any principal can directly or indirectly engage in activities that would harm the goodwill associated with the Crave brand. This includes diverting customers or performing any act that could jeopardize the business of Crave or its franchisees. The agreement also prevents franchisees from having any financial or beneficial interest in a competitive business, including through corporations, partnerships, trusts, or joint ventures, without prior written consent from Crave.
Therefore, a Crave franchisee is not allowed to circumvent the non-compete agreement by operating a competitive business indirectly through another individual or company. The restrictions explicitly cover actions taken "for Covenantor or through, on behalf of or in conjunction with any person or entity," ensuring that the franchisee cannot bypass the non-compete obligations through intermediaries.