Does a 360 Painting franchisee have exclusive territorial rights beyond what is described in the agreement?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as provided herein, Franchisee has no exclusive territorial rights, protected territory or other right to exclude, control or impose conditions on Franchisor's activities or on the location, development or operation of other or future franchises under the Marks.
2.3 Reservation of Rights.Franchisor retains the right, in its sole discretion, to:
- (i) own and operate, and license to others the right to own and operate 360 Painting Businesses outside of the Protected Territory using the Marks or any other marks Franchisor may designate;
- (ii) own and operate and license to others the right to own and operate similar businesses inside or outside of the Protected Territory under different marks;
- (iii) use the Marks and System in connection with conducting marketing and promotional activities within or outside of the Protected Territory, including marketing and promotional activities related to the solicitation of National Accounts (as defined in Section 2.4, below);
- (iv) use the Marks and System to offer services and products, or related items, in alternative channels of distribution, including the sale of goods or services through wholesale and retail
stores, via the Internet, through mail order catalog, and via direct marketing through telephone, television, or radio within or outside of the Protected Territory;
- (v) develop or become associated with other concepts (including dual branding relationships and/or operation of other franchise systems), whether or not using the System and/or the Marks, and award franchises under other concepts for locations anywhere;
- (vi) acquire, be acquired by, merge, affiliate with or engage in any transaction with other businesses (whether competitive or not), with units located anywhere, and in the event that such transaction involves the operation or license of a business in the Protected Territory, may include the conversion such a business to one operated under the Marks and the System; and
- (vii) engage in any other activity, action or undertaking that Franchisor is not expressly prohibited from taking under this Agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, a 360 Painting franchisee's territorial rights are generally limited to the Protected Territory as defined in the franchise agreement. The franchisee only has the right to use the Marks and the System in the residential geographic area described by ZIP Codes on Exhibit C-1 attached to the agreement. This Protected Territory typically includes between 50,000 to 80,000 single-family dwellings as of the agreement date. The franchisor may modify the Protected Territory to account for ZIP Code modifications made by the United States Postal Service, potentially resulting in a smaller area. Franchisees must operate the 360 Painting business within their Protected Territory from a home office or approved office space.
Beyond the defined Protected Territory, 360 Painting franchisees generally do not have exclusive territorial rights. The franchisor retains the right to operate or license others to operate 360 Painting businesses outside the Protected Territory. They can also operate similar businesses under different marks, use the Marks for marketing activities, and offer services through alternative channels of distribution. The franchisor can also develop other concepts, engage in transactions with other businesses, and designate National Accounts, which may include locations within the Protected Territory.
Franchisees are typically required to refer potential clients located outside their Protected Territory to the franchisor or the appropriate franchisee. However, the franchisor may grant permission for a franchisee to service clients outside their territory, but this permission is not ongoing. The franchisor can also grant other franchises the right to service clients previously serviced by a franchisee, without compensation to the original franchisee.
In summary, while 360 Painting franchisees are granted a Protected Territory, the franchisor retains significant rights to operate and license businesses outside of this territory, as well as to service National Accounts within it. Franchisees should be aware of these limitations and understand that their exclusive rights are restricted to the specific terms outlined in the franchise agreement.