Why Do Franchisors have Exclusive Territories

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Article source: http://www.franchising.org/. Used with author's permission.

The reason we Franchisors call it an exclusive territory is because we will not sell that area again to another franchisee. That is your area to market and to conquer and to generally obtain as much market penetration as possible. If you are a home-based business or mobile franchise then this is a serious issue. You can put as many service units in your area can support and try to make the most reasonable profit you can per each service unit you put into your exclusive territory. Most franchisors charge a percentage of the gross income and probably make a little off every service unit you buy, so they want you to expand.

It is your area to develop. It is your business and your area and no one else is allowed in it. Part of your franchise fee is for your exclusive area. In other words, it is for your right to work and develop a business using your Franchisor's name and Franchisor's methods in that exclusive territory so that you can make money. The potential growth and profit available in your area is limited only by your own vision.

We, franchisors have designed a business and a system that works very well and you have the rights within that territory to market that business and make money. It is a win/win situation and as long as the regulators do not get or put a stick up their butts it works fine. Or an attorney comes along and tries to get in between the franchise relationship to file a lawsuit for their own personal gains.

Think on this.

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