What is Crave prohibited from doing within a franchisee's Designated Territory, assuming the franchisee is in compliance with the Franchise Agreement?
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.
- 4.4 We and our affiliates retain all rights not expressly granted to you with respect to Crave outlets, the Marks and the sale of any goods and services, anywhere in the world, including, without limitation, the right:
- 4.4.1 to produce, offer and sell and to grant others the right to produce, offer and sell the products offered at dedicated Crave outlets and any other goods displaying the Marks or other trade and service marks through alternative distribution channels, as described below, both within and outside the Development Area, and under any terms and conditions we deem appropriate. "Alternative distribution channels" include, but are not limited to, the internet, catalog sales, grocery stores, club stores, specialty food stores, telemarketing or other direct marketing sales;
- 4.4.2 to operate and to grant others the right to operate dedicated Crave outlets located outside the Development Area under any terms and conditions we deem appropriate and regardless of proximity to a Franchised Business;
- 4.4.3 to operate and to grant others the right to operate dedicated Crave outlets at Non-Traditional Sites within and outside the Development Area under any terms and conditions we deem appropriate, subject to the right of first refusal described in Section 6.2; and
- 4.4.4 to acquire and operate a business operating one or more restaurants or food service businesses located or operating in the Development Area, except that these businesses will not operate using the Proprietary Marks.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, provided a franchisee is in full compliance with the terms and conditions of the Franchise Agreement, Crave and its affiliates are restricted from developing, operating, or granting franchises to others for Franchised Businesses within the franchisee's Development Area during the term of the agreement. This restriction is subject to the franchises granted to the franchisee under the agreement and any other exceptions expressly outlined in the agreement. This means that as long as the franchisee meets their obligations, Crave will not directly compete with them by opening another Crave outlet or allowing someone else to do so within their designated territory.
However, this protection is not absolute. Crave retains rights not expressly granted to the franchisee. This includes the right to produce, offer, and sell products offered at Crave outlets through alternative distribution channels like the internet, catalog sales, grocery stores, and telemarketing, both within and outside the Development Area. Crave also reserves the right to operate and franchise dedicated Crave outlets outside the Development Area, regardless of their proximity to the franchisee's location. Additionally, Crave can operate and franchise outlets at Non-Traditional Sites both within and outside the Development Area, subject to a right of first refusal for the franchisee.
Furthermore, Crave can acquire and operate existing restaurant or food service businesses within the Development Area, as long as these businesses do not use Crave's Proprietary Marks. This allows Crave to have some presence within the territory without directly competing under the Crave brand. The franchisee's protection is primarily against direct competition from new, dedicated Crave outlets established by the franchisor or other franchisees.
In summary, while Crave provides a level of territorial protection to its franchisees, it retains significant flexibility to operate and distribute its products through various channels and locations, which could potentially impact the franchisee's business. A prospective franchisee should carefully consider these exceptions and limitations when evaluating the franchise opportunity.