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Can a franchisor open a company-owned outlet in my exclusive territory?
Your franchise agreement should set out the territory in which you are allowed to operate the franchised business. Your rights to operate in your territory will inevitably be described as being either exclusive or non-exclusive. If your franchise agreement states that you have an exclusive right to operate the franchised business in your territory, this usually means that your franchisor, or any other franchisees, cannot operate in your territory. You should check whether your franchisor has reserved the right to operate in your territory, which again is detailed in your franchise agreement. However, even if you have exclusivity you cannot stop your franchisor, or any of its franchisees, responding to a request for the franchised goods and/or services from a customer within your territory if the request is not the result of any direct marketing by your franchisor or its franchisees in your territory. It is often the case that a franchisor will grant a degree of exclusivity by agreeing not to appoint any other franchisees in a franchisee’s territory, but will reserve the right for itself to open outlets within that territory. Whether this is the case in your particular circumstance will depend on what is contained in your franchise agreement.
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