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How are exclusive trading territories defined?
By no means do all franchise agreements grant exclusive territories to franchisees. Van-based and ‘work from home’-type franchises do very often grant franchisees a territory in which the franchisee has exclusive rights so that the franchisor cannot operate in the franchisee’s territory or grant franchises within that territory. Usually the area in which exclusivity is granted is specified either by way of a map or reference to postcodes. In the latter case, postcodes can vary, so the agreement needs to specify precisely whether it is the postcodes at the date of the agreement or postcodes as subsequently amended. If a map is used, care needs to be taken to set out the area covered and to ensure that any line drawn is drawn thinly - there have been a number of cases where franchisees and franchisors have fallen out as to whether the territory was limited by the inside or the outside of a line drawn on a map. Even if an exclusive territory is granted, the exclusivity cannot be complete because a franchisor is not able to prevent franchisees from responding to unsolicited enquiries from outside their territory, even if the enquirer is in the territory of another franchisee.
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