Under what circumstances is Crave required to compensate a franchisee for inventory, supplies, equipment, fixtures, and furnishings upon non-renewal?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures and furnishings.
Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures and furnishings not reasonably required in the conduct of the franchise business are notsubject to compensation.
Thissubsection applies only if: (i) the term of the franchise is less than five (5) years, and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least six (6) months' advance notice of franchisor's intent not to renew the franchise.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave may be required to compensate a franchisee upon non-renewal of the franchise agreement under specific conditions. This obligation arises if the franchise term is less than five years, and the franchisee is restricted from operating a similar business in the same area under a different brand after the franchise expires. Compensation is also required if the franchisee does not receive at least six months' advance notice that Crave will not be renewing the franchise agreement.
However, this compensation requirement does not apply to personalized materials that hold no value for Crave. Additionally, inventory, supplies, equipment, fixtures, and furnishings that are not reasonably necessary for operating the franchise business are also excluded from compensation. This means that if a franchisee has excess or obsolete items, Crave is not obligated to purchase them upon non-renewal.
This provision is designed to protect franchisees from unfair practices related to non-renewal, ensuring they receive fair market value for their assets when they are unable to continue the business. Prospective Crave franchisees should carefully consider the implications of these conditions, particularly the length of the franchise term and any restrictions on future business activities, as these factors directly affect their rights to compensation upon non-renewal.