During the term of the Crave Franchise Agreement, can a franchisee participate in a restaurant or food service business with similar menu items to Crave?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
containing some or all of the Confidential Information without Franchisor's express written permission.
- c. Covenantor shall surrender any material containing some or all of the Confidential Information to Franchisor, upon request, or upon termination of the Franchise Agreement.
d. Covenantor shall not at any time, directly or indirectly, do any act or omit to do any act that would or would likely be injurious or prejudicial to the goodwill associated with the System.
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:
- (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.
- c. The parties acknowledge and agree that each of the covenants contained herein are reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Franchisor.
- d. If the period of time or the geographic scope specified in Section 2.b. above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable. In addition, Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Agreement or any portion thereof, without Covenantor's consent, effective immediately upon receipt by Covenantor of written notice thereof, and Covenantor agrees to forthwith comply with any covenant as so modified.
3. General.
a. Covenantor agrees that in the event of a breach of this Agreement, Franchisor would be irreparably injured and be without an adequate remedy at law.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, during the term of the Franchise Agreement, a franchisee is generally prohibited from participating in any restaurant or food service business that features menu items that are the same or substantially similar to those offered in the Crave system. This restriction applies whether the franchisee acts as an owner, partner, director, officer, employee, consultant, or agent, or serves in any other capacity.
This non-compete covenant is designed to protect the goodwill and unique qualities of the Crave system, as well as the confidential information disclosed to the franchisee. The FDD states that franchisees receive valuable training and confidential information, including secret recipes and marketing methods. This restriction ensures that franchisees do not use this information to benefit a competing business during the term of their agreement with Crave.
After the termination of the Franchise Agreement, the franchisee is still restricted from participating in a similar business for two years within a 10-mile radius of the Designated Territory or any Crave outlet location. These covenants are acknowledged by both parties as reasonable limitations regarding time, geographical area, and scope of activity, ensuring they do not impose a greater restraint than necessary to protect Crave's business interests.
A franchisee must obtain written approval from Crave to engage in any outside business activities that could be considered competitive. This includes owning, maintaining, advising, investing in, making loans to, being employed by, engaging in, or having any interest in any restaurant or food service business other than the Franchised Business, which business is of a character and concept similar to the Franchised Business, including a restaurant which offers and sells the same or substantially similar food products.