Can a franchisee expand their geographical franchise area?

While the majority of franchise agreements do allocate a territory to franchisees, by no means all do. For management consultancy franchises or where franchisees operate retail premises that do not allocate a territory, franchisees are free to look for customers anywhere.The norm in franchising is for a territory to be allocated, although it is not necessarily an exclusive territory - about 60 per cent of franchisees are granted exclusive territories. The purpose of allocating a territory is usually to require franchisees to concentrate their marketing efforts within their defined territory.If a territory has been allocated, the franchise agreement will almost certainly impose obligations on the franchisee not to seek customers outside their territory - in other words, franchisees cannot actively market outside their territory.Having said that, it would almost certainly be a breach of competition law for franchisees to be prevented from responding to unsolicited enquiries from a customer outside their territory, which is referred to as passive selling.In some franchises franchisors allow franchisees to market outside their territory into neighbouring territories that have not been allocated, at least until a franchisee is found.