Franchisor Policies for Unlicensed or Sold Territories

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Franchisors often have issues when they own a brand which has service vehicles; where franchisees wish to operate in non-franchise assigned territories. We had this as a re-occurring issue in our franchise system. We came up with this policy, which is also in our Confidential Operations Manuals. Here is a sample policy for our franchisees:

"Unlicensed Areas"

"If you are called into an unlicensed territory for service, you may service that particular client. You will obviously pick up additional clients in those areas from referrals, leads and people who see the truck. It's ok to service these customers. However, you must:

Not have over one-third of your clientele out of your exclusive territory

Give up these clients if we sell that adjacent territory to a new franchisee

You must let us know which other area you are working in

We don't recommend washing cars outside your exclusive territory because it will cost you many hours in travel time over the course of a week. Fifteen minutes here, twenty minutes there. It adds up, trust us. We have assigned you an exclusive area, which will more than suffice. After all:

You know the area

You live in the territory

You have a perfect mix of business

We spent money marketing that area

If you are occasionally called to a non-assigned or unlicensed territory and you find another franchisee is also working that area, it's ok to split the area amongst yourselves with the understanding that which ever buildings/customers they were doing prior to your coming in that area you should honor. You and the other franchisee might both have to give up those customers if we sell or assign that territory and retreat back to your exclusive territory. Be advised that this can happen and it has before. If these customers you have been servicing are very important to you, you may want to purchase that additional area. We of, course, would love for you to have this as part of your exclusive territory because you are one of our best franchisees. Contact your regional director to start the negotiation process. And, by the way, don't bring your attorney to the negotiations. This is a very informal procedure.

We are all on the same team. If you can handle the additional customer demand and our staff likes you, I'm sure we can negotiate a fair deal for all concerned."

If you are a franchisor of a home based or service franchise system you must address this situation or you might wind up in court defending what is generally understood by all parties anyway. Think about this and get your policy ready and let it be known.

"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance;

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