What is the definition of 'Protected Territory' for a 360 Painting franchise?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
2.1 Protected Territory.
Franchisee shall only have the right to use the Marks and the System in the residential geographic area described by ZIP Codes on Exhibit C-1 attached hereto (the "Protected Territory").
The Protected Territory shall include between fifty thousand (50,000) to eighty thousand (80,000) single family dwellings as of the date of this Agreement.
If the United States Postal Service modifies any of the ZIP Codes encompassed by the Protected Territory or which represent the area included the Protected Territory, Franchisor may modify the Protected Territory to account for such ZIP Code modification(s).
The modified Protected Territory may result in fewer people being included in or a smaller geographic area being represented by the Protected Territory.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 360 Painting Franchise Disclosure Document, a franchisee is granted the right to operate their 360 Painting business within a specific residential geographic area, which is defined by ZIP Codes listed in an exhibit attached to the agreement. This area is referred to as the "Protected Territory." The Protected Territory typically includes between 50,000 and 80,000 single-family homes at the time the agreement is established.
It is important to note that the franchisor may modify the Protected Territory to account for any changes made to ZIP Codes by the United States Postal Service. Such modifications could result in a smaller geographic area or a decrease in the number of people included within the Protected Territory. Franchisees are generally restricted from promoting their business or providing services outside of their Protected Territory without the franchisor's permission, except when cooperating with other franchisees or with explicit written consent from 360 Painting.
Despite the protected territory, 360 Painting retains certain rights, including the ability to operate or license others to operate businesses outside the Protected Territory, operate similar businesses under different marks, and conduct marketing activities both within and outside the Protected Territory. 360 Painting also reserves the right to designate National Accounts, which are customers with multiple locations, even within a franchisee's Protected Territory, and to negotiate agreements with them. This means that while a franchisee has some territorial protection, 360 Painting can still serve national accounts within that territory, potentially impacting the franchisee's business.
Overall, while 360 Painting offers a Protected Territory, franchisees should be aware of the limitations and exceptions, particularly regarding modifications to the territory and the handling of National Accounts. Understanding these conditions is crucial for assessing the potential market and competition within the assigned territory.