Franchise Territory Agreements

Franchise territory agreements are a necessity for the franchisee and the franchisor. The agreement allows the franchisee to operate within the confines of a certain market knowing the franchisor will not sell that market to any other. As well, the franchisee is usually given every right to purchase other available markets. The way in which this helps the franchisor is that it allows them free reign to bring in the franchisees they need to fulfill market demand.

What often happens in some situations is the franchisee believes that the market they “want” to develop in is often available and may begin to work that area. This will lead to conflict as the franchisor may be pursuing leads in that area to develop in. If the franchisee fails that market it typically takes some time to rebuild the exposure for the franchisor.

Having a contractual obligation to perform is one thing. Having rules set forth from the very beginning is another. The franchise contract is a great set of rules for both franchisee and franchisor to live by and as a franchisor you must adhere to these rules as strictly as possible, the same being said for franchisees. Your franchise territory agreement will assist in mapping out the areas with which both parties may work. If you are a new franchisee, ensure you are afforded the opportunity to build in your area or if an older franchisee – you may wish to switch markets or even buy more. Whatever the reason, read your territory contract word for word. The franchisor should have all paperwork up to date as some markets may no longer be available. Maintain good contact with each other as well as keeping your paperwork up to date will aid both parties in settling franchise limitations and agreements. The best way to handle territory agreements is to have them digitally stored so they can be immediately dispatched to the proper party.