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Are exclusive franchise territories preferable to ones with no limits?
answered by Brain DuckettChairman of The Franchising Centre
The opinion and the answer that matters most here is that of the franchisor you are thinking of joining. There are many ways of defining franchise territories, but there is no ‘right way’, other than the right way for a particular network.
I’m certainly not a fan of territories that are totally exclusive to the franchisee, as that takes away flexibility from the franchisor. Maybe not immediately, but at some point in the future and in various yet unforeseen circumstances the franchisor may want to trade there itself or put in another franchisee.
To have a franchisee ensconced who cannot or will not grow the business to its full potential, for whatever reason, is not good for the franchisee, the franchisor or the rest of the network.
Territories that are exclusive in as much as they comprise the only addresses to which the franchisee can market, sell and provide their goods or services are also impractical.
Enquiries from outside that territory will inevitably come from friends of clients to whom the franchisee has been personally recommended. This is what is known as passive selling and it’s hardly likely that a franchisee is going to pass an opportunity to a colleague if the work is within striking distance of their own base.
All in all, I’d say it’s better to have an ‘area of prime responsibility’ and let the inevitable swings and roundabouts of business life sort things out amicably.
Brian Duckett is chairman of The Franchising Centre, part of the world’s largest network of specialist franchise consultants.
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