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BRIAN DUCKETT WRITES:

While it is not necessarily good practice for a franchisor to offer exclusive territories, the term is generally taken to mean that only you have the exclusive right to operate the system on your territory, ie nobody else, not even the franchisor, can provide the goods or services to customers on your patch. That doesn't necessarily mean you cannot provide the services elsewhere, unless of course 'elsewhere' is in somebody else's exclusive territory, although here is where we encounter something called 'passive selling'.

Say, for example, your business is about providing personal or domestic services. You do a good job for someone whose elderly mother lives in the neighbouring territory. She wants something done, but wants it done by the person who looked after her daughter, not some other franchisee she's never heard of. Generally it is okay for you to do the job, but you shouldn't deliver your leaflets to her neighbours while you're there.

In another example, if the neighbouring territory has not yet been allocated to another franchisee, whose is it? Your agreement may state it belongs to the franchisor, but you can 'borrow' it until a new franchisee comes along. When that happens, existing customers may be passed to the incoming franchisee.

The real answer to your question can only be provided by the franchisor in question, who can explain his particular policy on the matter. Back to List