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Do franchisors ever award more than one trading territory?
Usually franchisors award franchises for particular premises or for a particular territory. Clearly, franchisors have to be satisfied that the franchisee is going to be successful before further territories are granted and, accordingly, franchisors indicate to those franchisees who wish to take on additional territories that they will grant such additional territories, subject to certain specified conditions being met. There are exceptions to the rule that franchisors will grant a single territory and then wait to see if the franchisee is successful in that te rri to ry before granting further territories. This applies to relatively few franchisors who have reached the commercial decision that finding franchisees is ext remely difficult and that they are commercially better off in finding franchisees who have the capability to open a significant number of franchises. The advantage of this approach is that a good franchisee who is well resourced can represent a fast way to expand a network. The downside is that if rights are granted to a poor-performing franchisee, then the poor performance will be spread over a number of centres or territories and franchisees with a large number of outlets can become very powerful.
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