Where Is The Best Location To Open Your Franchise?
One critical factor to consider when you are thinking about opening a franchise is whether your location is suited for a franchise and which franchise suits your area the best. One thing that makes this consideration slightly easier is the notion of franchise territories. Most, but not all, franchises in the US are set up so that they grant exclusive territorial franchise rights to their franchisees to help prevent the issue of geographic competition.
The technical specifications for how a territory is allocated can vary from franchise to franchise. Some define them by geographical boundaries like streets, counties, or states, but others will have them simply defined as a radius surrounding each location. Regardless of how the territories are setup the general role of territories are the same. You as the franchisee have exclusive rights to the brand within that area. In doing so the franchise is suggesting that the territory you are granted has enough potential customers to allow your business to thrive. While it ensures you a protected area during the growth stage of your franchise it can also create pain points in the future.
As a franchise expands and the majority of its original territories are accounted for a risk begins to emerge. They can either stop expanding, or they can instead expand into pre-existing territories. This is beneficial for the franchise as a whole because they can service more customers, but for the old franchisees it cuts into their potential customer base. This is a cause of frustration for some older franchisees who have seen their territories cut away.
By and large exclusive territory agreements are extremely beneficial for both franchisees and franchisors. However, just like the other major factors of the franchising agreement they are issues that need to be discussed and negotiated during the application and decision process. As a potential franchisee you should make sure you understand what your territory agreement means and any recourse you may have if your franchisor decides to expand a new franchise into your territory.
18 Perfect Businesses for The Modern Day Man
The Krystal Klear Water franchise specializes in providing clean, mineral-rich drinking water to their customers through specialized water filtration systems. Franchisees provide water contamination testing, preventive maintenance, and in-home, naturally purified water. The health and fitness nut will love this franchise because Krystal Klear's water systems have less pollutants than the competition. The systems are also low maintenance and do not add salt to the water like other water softening systems. This residential water filtration supplier targets an annual market size of approximately $2.6 billion, with sales growth projected to grow at rates of 6-8% per year. Sounds like the same amount some gym rats spend at GNC each month.
Protect Your Brand: Trademark Monitoring for Franchisors
Almost all franchisors own at least one federally registered trademark (and if they don’t, they should). As a general principle, brand owners are required to monitor and enforce their trademark rights in order to retain the exclusivity afforded by federal trademark registrations. This takes on additional complexities for franchisors—who need to make sure not only that no one is using their trademarks without authorization, but also that franchisees are making proper use of their marks.
What is Subfranchising?
Like the franchisor, the subfranchisor signs a subfranchising agreement with the franchisees (when a franchise is sold) in the area. Technically, the subfranchisor takes over the role of the franchisor in certain geographic regions.