What is the 'Limitation on Grant / Territory' referring to in Section 2.3 of the 1-800-GOT-JUNK? Franchise Agreement for 1-800-GOT-JUNK?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
So long as Franchisee is in full compliance with the terms and conditions of this Agreement, Franchisor shall refrain from establishing or operating or granting to anyone else a franchise to establish or operate a 1-800-GOT-JUNK? business within the Territory.
The Territory will be divided into subterritories, which will be set out in Schedule B (the “Subterritories”). Franchisee shall pay an additional franchise fee for each Subterritory (“Subterritory Initial Fees”), as set out in Schedule B or as Franchisor and Franchisee may otherwise agree in writing. Franchisee shall not, without Franchisor’s prior written consent, begin offering the Services in any Subterritory until the Subterritory Initial Fee for that Subterritory has been paid in full. If Franchisor and Franchisee desire to add one or more additional Subterritories to the Territory, Franchisor may require, as a condition of granting such additional Subterritory, that Franchisee enter into an amending agreement, or at the election of Franchisor, Franchisor’s then current form of franchise agreement, in respect of such additional Subterritories, the term of which may coincide with the term of this Agreement. Without limiting Franchisee’s obligation to perform due diligence prior to entering into this Agreement, in the event Franchisee is unable to operate in any one or more Subterritory due to government regulations, Franchisor
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, 1-800-GOT-JUNK? grants franchisees a specific territory where they have the right to operate. According to Section 2.2, so long as the franchisee is in full compliance with the terms and conditions of the Franchise Agreement, 1-800-GOT-JUNK? will not establish or operate, nor grant to anyone else, a franchise to establish or operate a 1-800-GOT-JUNK? business within the franchisee's designated territory. This clause ensures that the franchisee has a protected area to conduct their business without direct competition from other 1-800-GOT-JUNK? franchises. The territory is further divided into subterritories, which are detailed in Schedule B of the Franchise Agreement. Franchisees must pay an additional franchise fee for each subterritory they wish to operate in.
However, the franchisee cannot begin offering services in any subterritory until the subterritory initial fee has been paid in full, without prior written consent from 1-800-GOT-JUNK?. If the franchisee wants to add more subterritories, 1-800-GOT-JUNK? may require them to enter into an amending agreement or 1-800-GOT-JUNK?'s current form of franchise agreement for those additional subterritories. The term of the new agreement may coincide with the term of the original agreement.
The FDD also states that if a franchisee is unable to operate in one or more subterritories due to government regulations, this does not release the franchisee from their obligations under the Franchise Agreement. This highlights the importance of franchisees conducting thorough due diligence before entering into the agreement to ensure they can operate in all designated subterritories. The agreement emphasizes that the franchisee bears the responsibility for understanding and complying with local regulations affecting their operations within the territory and subterritories granted by 1-800-GOT-JUNK?.