Can a Crisp & Green franchisee's immediate family member own a Competitive Business within the restricted radius?
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, individuals are prohibited from directly or indirectly engaging or participating in any Competitive Business. 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 such a business, other than a Crisp & Green-branded restaurant operated under a franchise agreement with the Franchisor. This prohibited behavior is understood and explicitly acknowledged as potentially injurious to Crisp & Green's protectable interests in Confidential Information, the Crisp & Green trademark, or the goodwill and/or reputation of Restaurants generally.
The agreement specifies that individuals are prohibited from engaging in any Competitive Business as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant. However, an individual may own less than 5% of a Competitive Business for investment purposes if the stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange, provided that neither the individual nor the franchisee controls the company in question.
Therefore, based on the excerpt, a Crisp & Green franchisee's immediate family member is restricted from owning or participating in a Competitive Business as defined in the agreement. The exception is owning less than 5% of a publicly traded Competitive Business for investment purposes, without controlling the company. It is important for prospective franchisees to fully understand these restrictions and how they apply to their family members to avoid any potential conflicts or breaches of the franchise agreement.