Franchise agony uncle: Is it likely that I will have an exclusive territory?
Nigel Toplis is managing director of The Bardon Group which has four major franchise companies, past Chairman of the British Franchising Association, and has 18 years of experience. Here he answers if it is likely that you will have an exclusive territory.
Q: Is it likely that I will have an exclusive territory?
A: The definition of an exclusive territory is generally where the franchisor guarantees or undertakes not to open another franchise of the same brand in that area.
The purpose is two-fold;
- It gives a degree of comfort to the franchisee that he/she will not face internal competition.
- By having one franchisee per territory it means that customers in that territory will (or should) only receive communication from that one franchisee.
There is nothing more annoying to the customer and questioning of the brand than if customers receive multiple communications from a number of franchisees.
Although most franchisors will grant franchisees a territory they are not all or always exclusive though we do give exclusive territories across our four brands.
Some franchisors may choose not to give exclusivity.
For instance, if part of the modus operendi of the franchise is for franchisees to work together/collaborate in bringing solutions to customers then it might not be appropriate to grant exclusive territories.
Additionally a franchise just starting out may not really know the potential of their business and so may decide against giving exclusive territories for fear of giving those that are too large and in effect limit the franchisors opportunity to grow.
Whether the territory is exclusive or not should not really be the issue – rather the issue is the close working together of the franchisor and the franchisee for mutual benefit where the franchisor recognises that by putting another franchise in the area would limit the potential of the incumbent franchisee but where the franchisee also recognises their obligation to maximise their efforts in that territory.
