Is Territorial Exclusivity An Important Element?

Franchise Key:

It is probably less important for some networks than others but, in general, YES, it is important for the franchisee. Why?

Without territorial exclusivity, another franchisee can set up in the same street as you, in the same shopping centre or in the same town.

It is therefore advisable to protect the franchisee’s profitability by agreeing not to set up another point of sale within a reasonable distance.

The difficulty is in knowing what is a reasonable distance. The franchisor must also be prevented from accompanying his network’s increase in strength or setting up in a new shopping centre if the potential is there.

Who would have imagined in 1970 that one could set up over 750 McDonalds in France, the country of good food? Wouldn’t the exclusivity areas established at the time have been too large?

This is why certain networks give priority to established franchisees for a second shop but not exclusivity.