Territory rights

Definition

The area a franchisee is promised, and whether anyone may sell into it.

Why It Matters

A franchise resale is bought on the territory as much as on the store, and there are two questions: what the map covers, and whether it is exclusive, protected only against another franchisee's location, or not protected at all. Delivery, online ordering and a franchisor's own national accounts can all reach inside a territory that looks exclusive on paper. Read Item 12 of the disclosure document and the franchise agreement itself, because the summary a seller gives is almost always the generous reading.

In numbers: A territory promised at 50,000 residents and delivered at 15,000 is 70% less market than the price assumed.