Does a franchisee pay a premium for an exclusive territory?
Louise Harris writes:
Exclusive territories are the norm in many franchises where the service is delivered locally to householders or a local, measurable target audience. Typically defined through postcodes, counties, numbers of householders or a socio-economic group, it gives the trading franchisee the best chance of success in their chosen area.
The blurring of lines comes when, for example, a restaurant opens and people may come from anywhere to visit that establishment if they find themselves in the area.
Where there is a restricted, non-compete territory, it allows the franchisee to fully exploit the area without concern that a competitor may be another franchisee in the same business. This doesn’t necessarily attract a premium, but it will mean the franchisor will include a ‘full effort’ clause.
If there are a limited number of territories and a franchisee is not fully working the territory allocated, the franchisor will most likely have a clause that permits removal of all or part of the territory. This would only be done after consultation and remedial efforts, but the ‘premium’ comes in the form of pressure to drive a decent business from the area (typically calculated on average franchisee performances).
Louise Harris is franchise director of Wilkins Chimney Sweep. She sits on the British Franchise Association board and chairs the membership committee.
You might also be interested in
Shelley Nadler writes: A franchisee will be responsible for obtaining funding for and setting up their business... read more
Louise Harris writes: Most franchisors will allow a sale to take place at any point in the... read more
John Pratt writes: The answer is yes and no! The whole point of franchising is that the... read more
I’ll start with the caveat that the franchisor has been properly set up with the help... read more
Exciting Franchise Opportunities
Start your own Learn Play Grow franchise
Request free information
Learn Play Grow
Learn Play Grow is a kids’ club that organises healthy children’s...
£14,000 Minimum Investment
Start your own Century 21 UK franchise
Request free information
Century 21 UK
Century 21 UK is an estate agency franchise operating across the...
£14,000 Minimum Investment
Start your own Caremark franchise
Request free information
Caremark
Caremark is a homecare franchise that provides a wide range of...
£14,000 Minimum Investment
Start your own Seniors Helping Seniors franchise
Request free information
Seniors Helping Seniors
This franchise employs seniors to provide compassionate care to the elderly...
£14,000 Minimum Investment
Start your own Expense Reduction Analysts franchise
Request free information
Expense Reduction Analysts
The world’s leading franchise in cost and supply management and winner...
£14,000 Minimum Investment
_(1)_56_59_s.png){kind=logo}
