During the term of the Crisp & Green franchise, can a franchisee have any ownership interest in a Competitive Business?
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 Crisp & Green's 2024 Franchise Disclosure Document, franchisees are generally prohibited from engaging or participating in any Competitive Business during the term of their franchise agreement. 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 any business that grants franchises or licenses to others to operate such a business. This prohibition extends to involvement as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant.
However, there is an exception to this restriction. Franchisees are permitted to own less than 5% of a Competitive Business if its stock or other ownership interests are publicly traded on a recognized United States stock exchange, provided that neither the franchisee nor any related individual controls the company. This exception allows for minor investment purposes without granting any control over the competing business.
This clause is designed to protect Crisp & Green's interests in its confidential information, trademarks, and the goodwill and reputation of its restaurants. By preventing franchisees from active involvement in competing businesses, Crisp & Green aims to maintain the integrity of its brand and system. Prospective franchisees should carefully consider these restrictions and ensure they do not have any conflicting business interests before entering into a franchise agreement with Crisp & Green.