expert advice: Robert Toth | Special Counsel | Sanicki Lawyers
This land is my land - or is it?
Franchise Territory – On line and social media issues “This land is your land…. This land is my land. From California to the New York Island…”
You can see examples of this with the fast food chains such as McDonald’s and 7 Eleven stores where there may be a number of stores all in close proximity to each other.
this issue and also advising disgruntled franchisees over these issues.
A classic old song by Woody Guthrie! Who you say? Well, if you were born after 1986, you wouldn’t know of course! but please, google Bruce Springsteen’s version, it is a classic.
Traditionally a part of the “value” a franchisee perceived in taking on a franchise was that they would be given exclusive rights to operate their business in an area and shut out competition from the franchisor or other franchisees in the system.
A territory is a geographic area designated by postcodes, a map or population in which the franchisee may have an exclusive, or nonexclusive right to operate.
Territory issues are a fertile issue of dispute often between franchisees in the same system. The trend over the years in retail and hospitality has been not to grant an area or territory but to offer a right to a site and rights to conduct local area marketing (“LAM”).
This has all changed with on line sales and social media where territories and areas don’t really work as franchisors might control on line sales and sell directly to consumers which takes away sales from the franchisee. We have seen franchisors grappling with
Franchise Territories
The grant of a territory can be exclusive, nonexclusive or subject to conditions such as the franchisee meeting minimum performance criteria. The rights may appear exclusive, but if they are subject to certain conditions the right to exclusivity in the territory may be reduced or taken away by the franchisor.
Not having exclusivity is “ often the norm, for example in the CBD there may be multiple sites within blocks of each other as there is sufficient demand and the catchment of customers is very localised.
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46 business franchise MAGAZINE
