Where each party may operate.
WHY TERRITORY DEFINITION MATTERS
It determines what a franchisee is buying and it is the commonest source of conflict.
WHAT TO DEFINE
Boundaries, precisely Whether they are exclusive What exclusivity actually prevents
WHY THAT LAST POINT
Exclusivity may prevent another outlet, or may prevent all sales, and the difference is substantial.
WHAT TO ADDRESS
Whether you may sell directly into the territory Whether other channels may Whether customers may travel between territories
WHY CUSTOMERS TRAVELLING
Franchisees serving customers from another territory creates conflict.
WHAT TO ESTABLISH
How such conflicts are resolved.
WHAT TO ASSESS BEFORE DEFINING A TERRITORY
Whether it can support the business.
HOW
Population, competition and realistic capture.
WHY
Territories too small to support an outlet produce failures.
WHAT TO AVOID
Granting large territories early.
WHY
They prevent expansion and they are difficult to recover.
WHAT TO CONSIDER
Granting an area with performance requirements for expansion within it.
WHAT THAT PROVIDES
Development of the area, with the right to reclaim it if it does not happen.
WHAT TO ESTABLISH ABOUT ONLINE SALES
How they are attributed.
WHY
It is increasingly contentious and frequently unaddressed in older agreements.
WHAT TO DOCUMENT
The territory, with a map or precise description.
WHY PRECISE
Vague descriptions produce disputes.
