Does the Crisp & Green non-compete agreement prevent participation in a Competitive Business as an investor?
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, the non-compete agreement generally prohibits franchisees from engaging or participating in any Competitive Business during their term of employment, service, association, or ownership participation. This includes acting 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 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, or one that grants franchises or licenses to others to operate such a business.
However, there is an exception to this restriction. The agreement does not prevent an individual from owning, for investment purposes, less than 5% of a Competitive Business, provided that the stock or other ownership interests are publicly traded on a recognized United States stock exchange. Additionally, neither the individual nor the franchisee can control the company in question.
In practical terms, a prospective Crisp & Green franchisee is significantly restricted from investing in competing salad or grain bowl businesses. They can only hold a very small, passive investment in a publicly traded competitor, and they must not exert any control over that company. This clause is designed to protect Crisp & Green's market position, trade secrets, and overall business interests by preventing franchisees from supporting or influencing competing ventures.