Protecting and safeguarding franchise territory is always recommended to the aspirants before signing the franchise deal. The article highlights the importance of exclusive territory rights for the franchisee
Franchise territory is a restricted area, which is allocated to a particular franchisee to make his outlet popular in that area/locality. Most of the franchisees being new to the business world may not be familiar with the importance of a good location for the success of their business. Many of them also do not give prior importance to the franchise agreement and sign it without any negotiations with the franchisors. An important thing to be kept in mind while signing a deal is the exclusive territory rights. As said in the beginning, location of the outlet plays the most important part in the franchisee’s success. Therefore, as a franchisee be sure to select your location as well as maintain your territorial rights. It can be detrimental for any franchisee when there is another opening of the same brand in vicinity of the previous one due to lack of territory rights.
Need of franchise territorial rights
It is the franchisee who has to suffer if the franchisor himself opens or allows another franchise outlet in the proximity of the earlier one. An action like this by the franchisor may lead to low sales and slashed profits of the former outlet. In such a situation, the only way left for the effected franchisee is to file a lawsuit against the franchisor. But he may be defeated in this due to lack of franchise laws as well as lack of evidence to prove his territorial boundaries. Safeguarding himself from such a situation lies only in the hands of the franchisee.
To safeguard against such situations, the franchisee needs to take the assistance of a qualified franchise attorney. Moreover, at his level he should keep in mind the below given pointers while dealing with the franchisor and the agreement.
Points to be remembered
Besides other factors, an exclusive territory right is critical for a business to run successfully. Other factors can also make or break a business. However, in order to gain good profits, the best thing for a franchisee is to strictly safeguard his exclusive territory rights.