What constitutes duplication of the Crepe De Licious system that could lead to termination?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
age_213_Picture_0.jpeg)
"Restricted Territory" means the geographic area within: (i) a 25-mile radius from Franchisee's Crepe de licious business (and including the premises of the approved location of Franchisee); and (ii) a 25 mile radius from all other Crepe de licious businesses that are operating or under construction as of the beginning of the Restricted Period; provided, however, that if a court of competent jurisdiction determines that the foregoing Restricted Territory is too broad to be enforceable, then the "Restricted Territory" means the geographic area within a 12-mile radius from Franchisee's Crepe de licious business (and including the premises of the approved location of Franchisee).
"System" means our system for the establishment, development, operation, and management of a Crepe de licious business, including Know-how, proprietary programs and products, Manual, and operating system.
- 2. Background. You are a manager or officer of Franchisee. As a result of this relationship, you may gain knowledge of our System. You understand that protecting the Intellectual Property and our System are vital to our success and that of our franchisees and that you could seriously jeopardize our entire System if you were to unfairly compete with us. In order to avoid such damage, you agree to comply with the terms of this Agreement.
- 3. Know-How and Intellectual Property. You agree: (i) you will not use the Know-how in any business or capacity other than the Crepe de licious business operated by Franchisee; (ii) you will maintain the confidentiality of the Know-how at all times; (iii) you will not make unauthorized copies of documents containing any Know-how; (iv) you will take such reasonable steps as we may ask of you from time to time to prevent unauthorized use or disclosure of the Know-how; and (v) you will stop using the Know-how immediately if you are no longer a manager or officer of Franchisee's Crepe de licious business. You further agree that you will not use all or part of the Intellectual Property or all or part of the System for any purpose other than the performance of your duties for Franchisee and within the scope of your employment or other engagement with Franchisee. These restrictions on Know-how, Intellectual Property and the System shall not apply to any information which is information publicly known or becomes lawfully known in the public domain other than through a breach of this Agreement or is required or compelled by law to be disclosed, provided that you will give reasonable notice to us to allow us to seek protective or other court orders.
- 4. Unfair Competition During Relationship. You agree not to unfairly compete with us at any time while you are a manager or officer of Franchisee's Crepe de licious business by engaging in any Prohibited Activities.
- 5. Unfair Competition After Relationship. You agree not to unfairly compete with us during the Restricted Period by engaging in any Prohibited Activities; provided, however, that the Prohibited Activity relating to having an interest in a Competitive Business will only apply with respect to a Competitive Business that is located within or provides competitive goods or services to customers who are located within the Restricted Territory. If you engage in any Prohibited Activities during the Restricted Period, then you agree that your Restricted Period will be extended by the period of time during which you were engaging in the Prohibited Activity.
- 6. Immediate Family Members. You acknowledge that you could circumvent the purpose of this Agreement by disclosing Know-how to an immediate family member (i.e., spouse, parent, sibling, child, grandparent or grandchild).
Source: Item 22 — CONTRACTS (FDD page 57)
What This Means (2025 FDD)
According to the 2025 Crepe De Licious Franchise Disclosure Document, the "System" is defined as the franchisor's method for establishing, developing, operating, and managing a Crepe De Licious Business. This includes proprietary know-how, programs, products, confidential operations manuals, and the operating system itself. Duplication of this system is addressed in the System Protection Agreement, which outlines prohibited activities for managers or officers of a Crepe De Licious franchise. These individuals may gain knowledge of the Crepe De Licious System and Intellectual Property, and Crepe De Licious emphasizes that protecting these assets is crucial for the success of both the franchisor and its franchisees.
Specifically, the System Protection Agreement prohibits managers or officers from engaging in activities that could unfairly compete with Crepe De Licious. This includes owning, operating, or having any interest in a "Competitive Business," which is defined as a business that sells similar products or services to those offered by Crepe De Licious within the franchisee's territory. The agreement also prohibits diverting or attempting to divert business away from Crepe De Licious, its affiliates, or its franchisees. However, the agreement does allow for owning an interest of five percent or less in a publicly-traded company that is a Competitive Business.
These restrictions apply during the "Restricted Period," which is generally two years after the manager or officer ceases their role with the Crepe De Licious franchisee. However, this period may be reduced to 12 months if a court deems the two-year restriction unenforceable. The "Restricted Territory" is defined as the area within a 25-mile radius of the franchisee's Crepe De Licious business and other Crepe De Licious locations operating or under construction. This radius may also be reduced to 12 miles if a court finds the 25-mile restriction too broad. Therefore, duplication of the Crepe De Licious system, especially through involvement in a competitive business within the restricted period and territory, could lead to termination or legal action.