What is a Crisp & Green franchisee prohibited from having an interest in?
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, a franchisee is prohibited from engaging 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. It also includes businesses that grant franchises or licenses to others to operate similar businesses, excluding Crisp & Green-branded restaurants operated under a franchise agreement with the company.
This restriction means that during the term of the franchise agreement, a Crisp & Green franchisee cannot be actively involved in or have a significant financial interest in any competing salad or grain bowl restaurant, or in a business that franchises similar concepts. This is to protect Crisp & Green's confidential information, trademark, goodwill, and reputation. The franchisee's prohibited behavior could be considered harmful to Crisp & Green's interests.
However, there is an exception: a franchisee can 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 allows for minor investment in publicly traded competitors without violating the non-compete agreement. This exception acknowledges that small, passive investments are unlikely to pose a significant threat to Crisp & Green's business interests.