What constitutes 'indirect inducement' to divert business away from a Crepe De Licious restaurant?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
"Prohibited Activities" means any or all of the following: (i) owning, operating, or having any other interest (as an owner, partner, director, officer, employee, manager, consultant, shareholder, creditor, representative, agent, or in any similar capacity) in a Competitive Business (other than owning an interest of five percent (5%) or less in a publicly-traded company that is a Competitive Business); and/or (ii) diverting or attempting to divert any business from us (or one of our affiliates or franchisees).
Source: Item 22 — CONTRACTS (FDD page 57)
What This Means (2025 FDD)
According to Crepe De Licious's 2025 Franchise Disclosure Document, 'Prohibited Activities' include 'diverting or attempting to divert any business' from Crepe De Licious, its affiliates, or its franchisees. This definition is broad and doesn't specify what 'indirect inducement' entails. However, Item 22 outlines several restrictions on franchisee activities that could potentially be interpreted as indirectly diverting business.
For example, a franchisee is prohibited from independently marketing on the Internet or conducting e-commerce without prior written approval from Crepe De Licious. This restriction aims to control the brand's online presence and prevent franchisees from engaging in online activities that could draw customers away from the official channels or other franchisees. Similarly, franchisees are restricted from selling products or services, or advertising products or services, within another franchisee's territory. This prevents direct competition between franchisees and protects each franchisee's customer base.
Additionally, the agreement specifies that managers or officers of a Crepe De Licious franchise cannot use the brand's 'Know-How' in any business other than the franchised Crepe De Licious business. This prevents individuals with access to proprietary information from using that knowledge to benefit a competing business, which could indirectly divert customers. The FDD also states that franchisees cannot make contributions or donations of items, services, or money to any organization in the name of the Franchised Business or associate with any Mark, without prior written consent. This is to ensure that all marketing and promotional activities align with the brand's overall strategy and do not inadvertently promote other businesses or causes that could draw customers away.
While the FDD does not explicitly define 'indirect inducement,' it provides a framework of restrictions and obligations that aim to prevent franchisees and their personnel from engaging in activities that could potentially divert business away from the Crepe De Licious system. A prospective franchisee should seek clarification from Crepe De Licious regarding specific scenarios that might be considered 'indirect inducement' to ensure full compliance with the franchise agreement.