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Is a protected trading territory classed as a restrictive practice?
EU competition laws apply to restrictions that prevent or distort competition to an appreciable extent in the EU. Similar principles apply within the UK under UK competition laws. A provision that involves restricting (or protecting) the territories into which, or the customers to whom, a franchisee may sell will generally fall within the competition law prohibition. It is a general principle that a franchisor must allow a franchisee to decide to whom and into which countries he or she wishes to sell. However, franchise agreements may restrict territories into which, or as the customers to whom, the franchisee may sell, so long as passive sales are permitted. Passive sales are sales by a company that responds to unsolicited requests from customers outside the exclusive territory. A restriction on active sales is permitted. Active sales are sales where a company approaches customers outside their exclusive territory or exclusive customer group, or an exclusive customer group reserved to the franchisor or allocated by the franchisor to another franchisee.
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