Exclusive Territory When Buying a Franchise Location
Exclusive territory must be disclosed to a franchisee when purchasing a franchise location. According to the New York Franchise Regulations a franchisor must disclose certain information to the franchisee regarding their franchise location whether or not exclusive territory is involved. The information that must be disclosed to the franchisee regarding the franchise location as written in the New York Franchise Regulations is as follows:
The franchisor has established or may establish another franchisee who may also use the franchisor's trademark;
The franchisor has established or may established a company owned outlet or other channel of distribution using the franchisor's trademark;
The franchisor or its affiliate has established or may establish other franchisees or company owned outlets or other channel of distribution, selling or leasing similar products or services under a different trademark;
Continuation of the franchisees territorial exclusivity depends on achievement of a certain sales volume, market penetration or other contingency and under what circumstances the franchisee's territory may be altered.
Franchise territory is an important element that a prospective franchisee should thoroughly understand prior to signing a franchise agreement. Having the franchise agreement reviewed by a franchise lawyer will allow you to understand what exclusive territory is outlined in the franchise agreement you are considering signing so that you can be sure you understand what exclusive territory rights you have.
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