Understanding franchise territories

Written on the 25 October 2013

One of the most common questions people ask when joining a business franchise is 'How will my territory be defined and operated?' This is an important consideration when buying into a franchise that depends on access to a regional client base, and your franchisor has a responsibility to explain how your territory works.

Exclusive rights

An established franchise system is likely to have a number of franchisees all over the country, and each new franchise will be assigned a fair and equal area in which to operate without impinging on others. This right of exclusivity should be detailed in disclosure documents when joining the franchise, which will also explain the consequences for franchisees that break these agreements.

How territories are defined

There is no single method for dividing territories, which may be defined by criteria such as:

• Postcodes or suburbs
• Lines drawn on a map
• Maximum radius from your franchise unit

The type of method used by the franchisor may vary depending on regions. Its important to ask your franchise company what system they use to ensure that your local territory has access to a respectable share of clients and potential leads, and you stand the best chance of success.

Marketing area

Territorial rights usually extend to advertising your services within your defined boundaries too. While your business may receive clients from the wider area, actively trying to find clients in other territories will cause consternation with other local franchisees and the franchisor itself. Established franchise companies may take care of local and national marketing for you, or connect you with local advertising vendors to make promotion easier.

B2B considerations

If youre joining a franchise that primarily works with business clients (B2B), your territory should offer the maximum potential to make leads and sales to local businesses, making business parks, retail areas and high streets potentially more relevant than residential areas. An established franchise company may also be able to provide new franchisees with a list of local businesses to give them a head start, including new businesses and existing clients.

Contact Snap to discover the benefits of joining an established franchise.