Does the Crisp & Green non-compete agreement prevent participation in a Competitive Business as a principal?
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, franchisees are restricted from participating in a Competitive Business in various capacities. The non-compete agreement explicitly prohibits involvement as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant. This broad restriction aims to protect Crisp & Green's confidential information, trademarks, and overall goodwill.
A "Competitive Business" is defined as any business that operates as a restaurant or 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 any business that grants franchises or licenses to others to operate such a business (excluding Crisp & Green franchises). This definition is crucial for prospective franchisees to understand, as it clearly outlines the types of businesses they cannot be involved with during their association with Crisp & Green.
However, there is an exception: franchisees can own less than 5% of a Competitive Business if its stock is publicly traded on a recognized U.S. stock exchange, provided that neither the franchisee nor an individual controls the company. This exception allows for minor investment in publicly traded companies that might be considered competitors, offering some flexibility while still preventing active involvement in competing businesses. This non-compete agreement remains in effect during the term of employment, service, association, or ownership participation.