Exclusive Franchise Territory Franchise Agreement vs. Protected Territory: What’s the Difference?
Exclusive Territory Franchise Agreement vs. Protected Territory: What’s the Difference?
An exclusive territory franchise agreement and a protected territory agreement may sound like the same thing, but there are some key differences to know. Learn more.
Understanding Exclusive Territories
An exclusive territory franchise agreement typically means the franchisor agrees not to open another franchise within a specified geographic area. This type of agreement ensures that the franchisee has the sole right to operate and market the brand within that designated region. The primary advantage of an exclusive agreement is that it provides franchisees with a sense of security, knowing that they will not face direct competition from another franchise of the same brand within their defined territory.
However, the term exclusive territory franchise agreement can sometimes be misleading. While it may sound like a franchisee has complete control over a region, this type of agreement may include clauses that allow the franchisor to open additional locations under certain conditions. For instance, if the franchisee does not meet specific sales targets or if there is a significant population increase in the area.
Diving into Protected Territory Franchise Agreements
A protected territory ensures that the franchisor will not open another franchise or sell a franchise territory within a specific area around the franchisee’s location. Franchisors often prefer this model because it provides flexibility in expanding the brand while offering franchisees protection against direct competition.
The key difference between exclusive and protected territories lies in the level of protection and exclusivity they offer. While an exclusive territory franchise agreement might sound more appealing at first, the terms of the agreement could have nuances that do not provide as much protection as one might think. In contrast, a protected territory provides a clear boundary within which the franchisee can operate without fearing another franchise of the same brand opening nearby.
Where to Find Territory Information
When researching potential franchise systems to invest in, potential franchise investors should study the brand’s franchise disclosure document (FDD). Item 12 within the FDD will define what type of territory is offered and the specific protections and limitations the franchisor offers its franchisees. Before signing any kind of franchise agreement, entrepreneurs should always perform their due diligence and go over all documents, including the FDD, with a lawyer familiar with franchising to understand the rights of the franchise owner.
Why AtWork’s Protected Territory Model Stands Out
AtWork offers potential franchisees a protected territory model that is superior to many other franchise opportunities. When signing on with AtWork, franchisees receive a protected territory based on zip codes with a population of approximately 200,000 individuals. This model ensures franchisees have a sizable market to tap into without worrying about direct competition from another AtWork franchise within their territory.
Furthermore, by focusing on a population-based model rather than a strict geographic boundary, AtWork ensures that franchisees have access to a diverse and expansive pool of potential clients and candidates. This approach is especially beneficial in areas where population density varies, ensuring every franchisee has an equal opportunity to succeed.
AtWork brings more than 30 years of staffing industry experience to the franchising world. With more than 90 locations already, franchisees can benefit from the award-winning national recognition the brand has already earned. There are still ample franchise territories available and room to grow for entrepreneurs to jump in the game and grow their own AtWork locations.
AtWork’s approach to granting protected territories based on population ensures that franchisees have a significant market to serve. On top of that, their combined industry-leading training and support, including payroll funding, makes it a standout choice for those looking to enter the staffing and recruiting industry.
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