Negotiating a Franchise Agreement: Exclusive Franchise TerritoryBy James Blake on
If you’re buying a franchise, it’s important to understand the scope of your protected area of business and franchise territory when negotiating a franchise agreement. It’s also good to have general knowledge of franchisee rights under state and federal franchise laws and the link between franchise law and intellectual property. Establishing an exclusive territory for a franchise business can be essential for many franchisees, however, franchisees often misunderstand franchise territory issues, making it important to engage a Texas franchise law attorney to help you with negotiating a franchise agreement when you are buying a franchise in Texas.
Franchisee Rights: Exclusive Territory & Protected Area
What exactly are franchisee rights to a protected area or exclusive franchise territory? The franchise agreement describes the protected business area and limits a franchisee’s distribution of products or services to one or more distribution channels. Some franchisees, such as retail stores and restaurants might have “site only” franchisee rights that do not convey any additional franchise territory. In other cases, a franchisor may grant an exclusive franchise territory, allowing a franchisee to develop a multi-unit franchise network throughout a region. Your ability to secure a larger franchise territory for a multi-unit franchise network may depend on effective assistance from a Texas franchise lawyer, and your own business strengths that make you an attractive franchisee candidate in the eyes of a franchisor.
Franchise Territory & Franchise Disputes
Many franchisees seek a franchise law attorney only after a problem evolves – such as franchisor actions that reduce the franchisee’s sales (read Franchisor vs Franchisee Encroachment). In those cases, a franchisee might have already signed a franchise agreement with explicit language permitting the franchisor to compete with the Franchisee – not a strong position to pursue franchisee rights or franchise law litigation. If, however, the franchise agreement is inadequate regarding the territory rights of the franchisee, a franchisee may have good franchise dispute claims, such as breach of express and implied contract claims, including the implied covenant of good faith and fair dealing.
Avoid business risks and franchise litigation nightmares by engaging a Texas franchise law attorney to assist you with negotiating franchise territory and other franchise agreement issues when you are buying a franchise in Texas. Our Texas law firm regularly advises franchisors and franchisees in franchise program development, buying a franchise and selling a franchise business, as well as other franchise dispute and litigation matters.
Contact a Texas Franchise Law Attorney, Free Call.
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