Does Golden Krust Caribbean Restaurant reserve rights not expressly granted to the franchisee?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
We (and our affiliates) reserve all rights that are not expressly granted to you under the Franchise Agreement. Among other things, we and our affiliates have the sole right to do any or all of the following (notwithstanding proximity to your Restaurant): (a) to establish and grant to other franchisees the right to establish, Traditional Golden Krust Restaurants anywhere other than your site on such terms and conditions we deem appropriate; and (b) to sell products identified by the Marks through distribution channels other than Traditional Golden Krust Restaurant (including, but not limited to, institutional customers of Golden Krust such as schools, prisons, club stores, gas stations, convenience stores and/or grocery stores). If we (or our affiliates) solicit or accept orders inside your territory, then we have no obligation to compensate you.
We have not established and do not intend to establish other franchises or Company-owned bakeries selling similar products or services under a different trademark. However, neither we nor our affiliates are restricted from establishing other franchises or company owned outlets or other channels of distribution selling or leasing similar products or services under a different trademark.
Source: Item 12 — TERRITORY (FDD page 23)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant retains all rights not explicitly granted to the franchisee. These reserved rights allow Golden Krust Caribbean Restaurant (and its affiliates) to establish Golden Krust Restaurants anywhere other than the franchisee's specific site, under terms and conditions they deem appropriate. Additionally, they can sell products identified by their trademarks through various distribution channels beyond the traditional Golden Krust Restaurants, such as grocery stores, club stores, convenience stores, gas stations, and other restaurants.
This reservation of rights means that a franchisee's territory is not exclusive. Golden Krust Caribbean Restaurant can grant other franchises or operate company-owned outlets nearby, and they can also sell products through alternative channels within the franchisee's market area. The FDD clearly states that franchisees may face competition from other franchisees, from outlets that Golden Krust owns, or from other channels of distribution or competitive brands that Golden Krust controls.
For a prospective franchisee, this lack of territorial exclusivity is a significant consideration. It means that Golden Krust Caribbean Restaurant could potentially authorize another franchise or open a company-owned store next door, or sell patties in local supermarkets, without any obligation to compensate the existing franchisee. This could impact the franchisee's revenue and profitability. The franchisee needs to be aware that accepting the franchise is based on their own independent investigation of the suitability of the premises.
Golden Krust Caribbean Restaurant also retains the right to use other channels of distribution, such as the internet, to make sales outside the franchisee's territory, unless prior approval is obtained from them. Furthermore, Golden Krust Caribbean Restaurant is not restricted from establishing other franchises or company-owned outlets or other channels of distribution selling or leasing similar products or services under a different trademark. This could further intensify competition for the franchisee.