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Exclusive Territory or Account Protections: 4 Questions to Consider As You Research Your Franchise

Would you enjoy the freedom to reach out to potential customers anywhere, thus running a business with no restrictions? Or do you find the security of maintaining an assigned geographic territory feels right for you?


While a great number of franchise systems out there today do in fact feature options for investing franchise partners that involve an assignment of territory, not all franchise businesses fix franchisees to a specific region in which to serve customers.


Certainly, both approaches to promoting and protecting franchisee success have their valid place in many different sectors. Franchisees adhering to territories, whether exclusive or not, surely have personalized opinions on the pros and cons of setting up their business this particular way. Likewise, those without limits on territory have their own set of views worth considering.


Ultimately, the question is one of protecting a franchisee’s business in such a way that he or she is granted every reasonable chance of consistently finding and keeping a steady stream of loyal customers.


4 Key Questions to Ask Yourself:

1. Am I interested in a physical territory that delineates where my pool of potential customers begins and ends? If so, what territory size interests me and do I feel confident that I can deliver on the any relevant requirements related to my having sole responsibility for serving a particular territory? 


City Map with Two Points


2. Am I familiar with the difference between franchise agreements that involve exclusive physical territory allocation and those that are not exclusive, as well as the implications that either scenario would have on my business?


3. Am I familiar with the difference between franchise agreements that involve physical territory allocation versus account protection agreements without territory allocation, as well as the implications that either scenario would have on my business?


4. How do I feel about facing competition and limitations placed on my business? Do I prefer to have competitive scenarios minimized, even if it means the potential service area that my business can reach into is limited in scope?


There are different arrangements in franchise agreements that help to create a greater degree of both freedom and security as franchisees seek to maximize their recruitment of loyal customers. It may be said that security at times comes with a cost and freedom is often sacrificed. Franchisees seeking to keep their horizons wide open in terms of servicing area must also consider what they are sacrificing, while those seeking to maintain an exclusive territory should do the same. 

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