What is a Crisp & Green franchisee required to disclose regarding competitive businesses?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
shall truthfully fill out the Franchisee Acknowledgment attached hereto as Exhibit F.
- 1.03 Your Representations. You and your Principal Owners, if applicable, represent and warrant to us that: (a) neither you nor any of your Principal Owners has made any untrue statement of any material fact or has omitted to state any material fact in obtaining the rights granted hereunder; (b) neither you nor any of your Principal Owners has any direct or indirect legal or beneficial interest in any business that may be deemed a Competitive Business, except as otherwise completely and accurately disclosed in your franchise application submitted to us; and (c) the execution and performance of this Agreement will not violate any other agreement to which you or of any of your Principal Owners may be bound. You recognize that we have approved your franchise application
in reliance on all of the statements you and your Principal Owners have made in connection therewith.
1.04 Certain Definitions. The terms listed below have the meanings which follow them and include the plural as well as the singular. Other terms are defined elsewhere in this Agreement in the context in which they arise.
"Affiliate" – Any person or Entity that directly or indirectly owns or controls the referenced party, that is directly or indirectly owned or controlled by the referenced party, or that is under common control with the referenced party. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an Entity, whether through ownership of voting securities, by contract or otherwise.
"Catering Service" – The delivery of food and beverage products which are prepared or partially prepared at the Franchised Restaurant and delivered to customers at locations other than the Restaurant's site, where, in addition to delivering such products, Franchisee provides ancillary services (such as setting up for, serving or otherwise distributing such food and beverage products) at such locations.
"Competitive Business" – Any business that: (i) operates as a restaurant or similar foodservice provider and derives more than twenty percent (20%) of its revenue from selling fresh salads and grain bowls in a fast-casual, quick-service, drive-thru, catering or delivery format; or (ii) grants franchises or licenses to others to operate the type of business specified in clause (i) (other than a "CRISP & GREEN"-branded restaurant operated by us or our Affiliates, or under a franchise agreement with us).
Source: Item 23 — RECEIPTS (FDD pages 66–252)
What This Means (2024 FDD)
According to the 2024 Crisp & Green Franchise Disclosure Document, a prospective franchisee and their principal owners must disclose any direct or indirect legal or beneficial interest in any business that may be deemed a Competitive Business. This disclosure must be complete and accurate within the franchise application submitted to Crisp & Green.
A "Competitive Business" is defined as any business that operates as a restaurant or similar food-service provider deriving 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 operating under a franchise agreement with Crisp & Green.
However, the agreement does allow for franchisees to own less than 5% of a Competitive Business for investment purposes, provided the stock or ownership interest is publicly traded on a recognized United States stock exchange, and neither the franchisee nor individual controls the company. This exception acknowledges that franchisees may have investment portfolios that include minor holdings in publicly traded companies that might technically be considered competitors.
This disclosure requirement ensures that Crisp & Green is aware of any potential conflicts of interest or competitive activities that a franchisee may be involved in. It allows Crisp & Green to assess whether the franchisee's other business interests could negatively impact their ability to focus on and successfully operate the Crisp & Green franchise. Failing to disclose such interests could be a breach of the franchise agreement.