Posted in Marketing and Strategy Terms, Total Reads: 458
Definition: Protected Territory
It is a special provision given to a distributor or a franchise for a specific period having a guarantee that there will be no additional distributor or franchise appointed in the specified geographical area. Here the franchise/ distributor are offered exclusive rights to sell their products within a specified territory or area.
But a number of circumstances may arise which needs us to secure our territory.
a) Ambiguous Franchise Contract:
Such contracts are designed to document legal details about the mutual rights between franchisors and franchisees. The more the details present, the more protection present.
It must also include the details about the contingency model that may occur along the way.
The contract must contain all the information we need to protect the territorial interests.
b) Mergers & Acquisitions:
During a merger, the other company also has a franchise in the territory. This leads to two franchises operating under the same territory. Sometimes the acquired franchise is required to pay a particular percentage of sales to the other franchise in the same territory. The good thing is that you are compensated if the other franchise operates in your territory.
It is hence beneficial to know the legal rights and work with the franchiser to make the territory as protected as possible.