What is the effect of the failure to insert the address into Exhibit B on the enforceability of the Crisp & Green Agreement?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
2.02 Your Designated Area. The Preliminary Designated Area identified on Exhibit B, if any, is the general location where you intend to secure the Premises for the Franchised Restaurant. If a Preliminary Designated Area is specified in Exhibit B, we will not grant anyone else the right to develop or operate a CRISP & GREEN Restaurant in the Preliminary Designated Area for 60 days from the Effective Date of this Agreement. Once the Premises has been approved by us, you hereby authorize us to define in Exhibit B a "Designated Area" around the Premises; provided that such Designated Area will generally consist of a geographic area illustrated on a map whose boundaries will be designated based on our current criteria for size, demographics, and topographical features. Once defined in Exhibit B, your Designated Area will remain constant throughout the initial Term of this Agreement (unless you relocate the Franchised Restaurant and upon renewal or transfer). During the Term, and subject to the following Section 2.03, we will not establish (directly or through an Affiliate), or grant to a third party the right to establish, a CRISP & GREEN Restaurant physically located within your Designated Area. You acknowledge and agree that we and our Affiliates have the right to develop and operate and grant others the right to develop and operate CRISP & GREEN Restaurants outside the Designated Area, regardless of their proximity to the Designated Area or any negative impact they may have on your Franchised Restaurant.
Source: Item 23 — RECEIPTS (FDD pages 66–252)
What This Means (2024 FDD)
Based on the 2024 Crisp & Green Franchise Disclosure Document, Exhibit B to the franchise agreement defines the franchisee's designated area. According to the agreement, the preliminary designated area is identified on Exhibit B and is the general location where the franchisee intends to secure their premises. If a preliminary designated area is specified, Crisp & Green will not grant anyone else the right to develop or operate a Crisp & Green restaurant in that area for 60 days from the agreement's effective date. Once Crisp & Green approves the premises, the franchisor will define a "Designated Area" around it in Exhibit B. This area's boundaries will be based on Crisp & Green's criteria for size, demographics, and topographical features.
Once defined in Exhibit B, the franchisee's designated area remains constant throughout the initial term of the agreement, unless the franchisee relocates the franchised restaurant upon renewal or transfer. During the term, Crisp & Green will not establish or grant to a third party the right to establish a Crisp & Green restaurant physically located within the franchisee's designated area. However, Crisp & Green and its affiliates retain the right to develop, operate, and franchise Crisp & Green restaurants outside the designated area, regardless of their proximity to the designated area or any negative impact they may have on the franchisee's restaurant.
The FDD does not explicitly state the effect of failing to insert the address into Exhibit B. However, the document states that the designated area is defined in Exhibit B, which suggests that the inclusion of this information is important for determining the franchisee's exclusive territory and the franchisor's limitations on establishing other locations nearby. A prospective franchisee should clarify with Crisp & Green the implications of an incomplete Exhibit B and how it would affect the enforceability of the agreement, particularly regarding territorial rights and restrictions.