Search Results: territory

What is a Reasonable Territory for a Franchisee in New York City?

May 25, 2022

In most parts of the country, franchisees negotiate territories measured in miles. But, in New York City, a territory with a several-mile radius could effectively provide protection for the entire city. So, if you are buying a franchise in one of the five boroughs, what can you reasonably expect in terms of your “protected” or “exclusive” territory? New York City franchise lawyer Jeffrey M. Goldstein shares his thoughts.

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Key Considerations for Evaluating Territory Rights in Franchise Opportunities

Jul 31, 2017

You are planning to buy a franchise, and one of the benefits you are most looking forward to is the fact that you will have an exclusive territory. Once you sign your franchise agreement and pay the initial franchise fee, you will be the only one operating under your franchisor’s trusted brand and proven business system for miles around. But, is your territory really exclusive? Not all franchisors offer exclusive rights, and those that do not are not necessarily forthcoming about the limited protections they offer (if they offer any at all). Here are some important considerations to keep in mind when trying to interpret the territory provision of your franchise agreement: 4 Ways Territory Rights Not Be What They Seem 1. Your Territory is Protected but Not Exclusive. Many franchisors offer territory rights that are protected but fall short of being truly exclusive. The most common example of this is a reservation of rights for the franchisor to sell, “through alternate channels of distribution.” The territory may even be labeled as “exclusive,” and then have this carved out as an exception. 2. Your Territory is Not Protected at All. Some territory provisions are written to exclusively protect the franchisor. Consider this: “Franchisee’s territory (the ‘Territory’) is the geographic area within a two-mile radius of the franchised outlet. Franchisee may not sell outside of the Territory without Franchisor’s express written consent.” This provision “grants” a territory, but what does it really say? There is no protection, and all it really […]

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Is Your Franchise Territory Exclusive, Protected, or Non-Existent?

Jun 24, 2016

As a franchisee (or prospective franchisee), among the many important issues you need to consider is the question of geographic protection. When you buy a franchise, you expect to benefit from the franchisor’s brand, systems and goodwill, and the last thing you want is for another franchisee – or even the franchisor – to end up using these against you. When many people hear that they have a “territory,” they assume this means that their territory is exclusive—that is, that no one else within the franchise system will be able to compete against them in their territory. Unfortunately, this isn’t always the case, and the actual territorial rights that are offered (if any) often are not clear in the franchise agreement or the Franchise Disclosure Document (FDD). Exclusive vs. Protected Territories Although they are often used interchangeably, “exclusive” and “protected” can actually have different meanings in the franchise context. If your franchise territory is truly exclusive, your business should be the only source of the franchisor’s goods or services in the territory. On the other hand, if your territory is merely protected, then your franchise agreement may authorize certain forms of competition, such as franchisor sales through alternative channels of distribution (i.e. the internet). As a third option, some franchise systems do not offer any territorial protection at all. In these systems, the franchisor is free to open competing outlets and use alternative channels wherever it pleases. While you may initially be willing to trust your franchisor not to “cannibalize” […]

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10 Common Issues in Franchisor-Franchisee Disputes

Feb 15, 2024

Disputes between franchisors and their franchisees can involve a wide range of issues. As a franchisee, it is important to be aware of these issues so that you know when legal action may be necessary to protect your franchise. When these issues arise, informed decision-making is critical, and this makes it important to speak with an experienced franchise attorney as soon as possible.

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2023 Year in Review: What Lessons Can Franchisees Carry Into 2024?

Dec 29, 2023

Each year, we publish lots of articles for franchisees on our blog. We know that being a franchisee can be hard, and we want to make sure that those who need legal help are able to make informed decisions about their next steps. While some of our articles are relevant to a specific point in time, most are designed to serve as resources for years to come.  

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When is a Franchisor Liable for Encroachment?

Nov 30, 2023

For many franchisees, territorial protections are essential to their profitability. Facing competition from multiple businesses serving potential clients or customers both in person and remotely, franchisees need to know that they will not face additional competition from within their own brands.

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Should You Buy a Seasonal Franchise?

Nov 23, 2023

From stores that sell Halloween costumes to stores that sell winter holiday décor, we see lots of seasonal businesses pop up this time of year. Recently, we have seen a trend of businesses offering holiday decorating services as well. Many of these stores are franchised outlets. If you are interested in owning a holiday-centric business, is a seasonal franchise right for you? Here are 10 key considerations from franchise lawyer Jeffrey M. Goldstein.

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7 Common Issues for Hotel Franchise Owners

Jul 31, 2023

Like all industries, franchisor-franchisee relationships in the hotel industry often lead to disputes. Franchisors often over-promise and under-deliver, and franchisees often find themselves struggling to remain solvent due to factors beyond their control.

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Buying a Hotel Franchise in 2023

Jul 24, 2023

The lodging industry is booming. Even with a slowdown caused by the COVID-19 pandemic, the lodging industry in the United States has experienced an average growth of 7.1 percent per year since 2018. As more people continue to travel both to and within the U.S., the industry appears poised for long-term growth as well.

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Is Co-Branding the Right Multi-Unit Franchise Opportunity for You?

Jun 16, 2023

As a franchisee (or prospective franchisee), purchasing and operating multiple units is one of the keys to increasing your profitability. Most franchises offer a restricted suite of products or services from a single retail location, and their revenue potential is limited as a result. Operating multiple units expands this potential, and, as a result, it is an option that many franchisees (and prospective franchisees) will find themselves considering.

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