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Frequently Asked Questions - FAQ

Is territorial exclusivity important?

It is probably less important for some networks than others but, in general, yes, it is important for the franchisee. The reasons for this are as follows:

If there is no territorial exclusivity, then 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 a franchisee’s profitability by agreeing not to set up another point of sale within a reasonable distance.

The difficulty is in knowing what a “reasonable” distance is. Franchisors must also be prevented from profiting from the increase in strength of their network by, for example, setting up their own business in a new shopping centre if the potential is there.

Who, for example, would have thought in 1970 that 750 McDonalds would be established in France, the country of good food? The exclusivity areas established at the time would probably have been too large.

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

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