What is a Crisp & Green franchisee prohibited from doing with respect to an Entity that grants franchises for a Competitive Business after termination?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
I further agree that, during the term of my employment/service/association or ownership participation, I will not, directly or indirectly, engage or participate in any Competitive Business (defined below in this paragraph), any of which such prohibited behavior I understand and hereby explicitly acknowledge would or could be injurious to, or (in Franchisor's sole judgment) have an adverse effect upon, Franchisor's protectable interests in the Confidential Information, the CRISP & GREEN trademark, or the goodwill and/or reputation of Restaurants generally. I agree that I am prohibited from engaging in any Competitive Business as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant. For purposes of this Agreement, a "Competitive Business" means any business that: (1) operates as a restaurant or similar food-service provider and derives more than twenty percent (20%) of its revenue from selling salads and grain bowls in a fast-food, quick-service, drive-thru or drive-in format; or (2) grants franchises or licenses to others to operate the type of business specified in the preceding subparagraph (other than a CRISP & GREEN-branded restaurant operated under a franchise agreement with Franchisor). Despite the foregoing definition of a Competitive Business, nothing under this Agreement or the Franchise Agreement will prevent Individual from owning for investment purposes less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange, and so long as neither Individual nor Franchisee controls the company in question.
Source: Item 23 — RECEIPTS (FDD pages 66–252)
What This Means (2024 FDD)
According to the 2024 Crisp & Green Franchise Disclosure Document, during the term of employment, service, association, or ownership participation, a franchisee is prohibited from engaging or participating in any Competitive Business as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant. A "Competitive Business" is defined as any business that operates as a restaurant or similar food-service provider and derives more than 20% of its revenue from selling salads and grain bowls in a fast-food, quick-service, drive-thru or drive-in format, or grants franchises or licenses to others to operate the type of business specified in the preceding subparagraph (other than a CRISP & GREEN-branded restaurant operated under a franchise agreement with Franchisor).
This means that while associated with Crisp & Green, franchisees cannot be involved in any capacity with a business that competes with Crisp & Green, either directly through similar food sales or indirectly through franchising similar businesses. This restriction aims to protect Crisp & Green's confidential information, trademarks, and goodwill. The FDD specifies that engaging in such competitive activities could be harmful to Crisp & Green's interests.
However, there is an exception: an individual may own less than 5% of a Competitive Business if its stock or ownership interests are publicly traded on a recognized United States stock exchange, provided that neither the individual nor the franchisee controls the company. This exception allows for minor investment purposes without active involvement in the competitive entity. This clause ensures that franchisees do not actively undermine the Crisp & Green brand while still allowing for minor investment opportunities in publicly traded companies.