Under the Crave agreement, does the franchisor have a duty to exercise its powers to protect its interests?

Based on the 2025 Crave Franchise Disclosure Document, while there isn't an explicit clause mandating Crave to actively exercise its powers to protect its interests, several provisions suggest an implicit expectation for them to do so. For instance, Crave retains the right to sell its assets, trademarks, or the entire system to a third party, go public, engage in private placements, or undergo restructuring. However, the document stipulates that any assignment will only occur if the assignee is willing and financially able to assume Crave's obligations under the Franchise Agreement. This indicates a concern for maintaining the integrity and obligations of the franchise system, which indirectly protects Crave's interests.

Furthermore, the FDD includes addenda required by certain states like South Dakota and Virginia, which impose conditions on the franchise agreement to protect franchisees. For example, in South Dakota, Crave must defer payment of initial fees until all pre-opening obligations are met and the business is operational. Similarly, Virginia's Retail Franchising Act restricts Crave from canceling a franchise without reasonable cause or using undue influence to induce a franchisee to surrender their rights. These state-specific regulations suggest that Crave must act responsibly and fairly, which ultimately contributes to protecting the overall interests of the franchise system.

Additionally, the non-compete covenants outlined in the agreement serve to protect the goodwill and unique qualities of the Crave system. Franchisees (or "Covenantors") agree not to engage in activities that would divert business or compete with Crave outlets, both during the term of the agreement and for a period of two years after termination. These covenants, while primarily protecting Crave's interests, also imply a responsibility on Crave's part to enforce these provisions to maintain the integrity of the system and prevent unfair competition. Therefore, while not explicitly stated as a duty, Crave's actions and rights within the franchise agreement suggest an implicit obligation to protect its interests through responsible management and enforcement of the agreement's terms.