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How is a ‘territory’ defined?
There are many different ways in which a territory can be defined. The franchisor will need to take great care to make sure that the franchisee can clearly ascertain the territory that is being granted. If there is any ambiguity in the description of the territory it can lead to disputes with neighbouring franchisees, which can be particularly problematic when dealing with a mobile franchise or, for example, a pizza delivery restaurant. A simple method would be to state the territory is a certain radius from the premises. If the franchisor does not supply a map showing the extent of that radius, the franchisee will need to make further investigations. Possibly the simplest way to define a territory is by reference to a map, whereby the territory is marked by a line drawn in a specified colour pen. However, problems can be caused in dense urban areas where a thick marker is used, and is difficult to ascertain in relation to certain roads where the territory of one franchisee begins and the other franchisee ends. A popular method of designating territories is by reference to postcodes. The main problem with designating postcodes is that they can change. Where this is the case, the franchisee needs to check if the franchise is to operate in the postcode areas granted at the date of the agreement or the postcode areas as they stand at any time during the term. This should be clarified in the franchise agreement.
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