During the term of the Crisp & Green franchise, can a franchisee perform services for 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 the 2024 Crisp & Green Franchise Disclosure Document, during the term of the franchise agreement, a franchisee is restricted from engaging or participating in any Competitive Business. This restriction applies whether the franchisee acts 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 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.
This restriction is in place to protect Crisp & Green's confidential information, trademark, and the goodwill and reputation of its restaurants. The FDD states that any such prohibited behavior could be injurious to or have an adverse effect on Crisp & Green's protectable interests. This clause aims to prevent franchisees from using the knowledge and experience gained from operating a Crisp & Green franchise to benefit a competing business.
However, there is an exception: an individual can own less than 5% of a Competitive Business for investment purposes, provided the stock or ownership interests are publicly traded on a recognized United States stock exchange, and neither the individual nor the franchisee controls the company. This exception allows for minor investment without granting any influence over the Competitive Business.
In practical terms, a Crisp & Green franchisee must avoid any active involvement or significant ownership in businesses that directly compete with Crisp & Green's core offerings. This non-compete clause is a standard practice in franchising to safeguard the franchisor's brand and business model.