If 360 Painting engages in a transaction with another business that operates in a franchisee's Protected Territory, can that business be converted to one operated under the Marks and the System?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
We retain the right to: (a) own and operate, and license to others the right to own and operate 360 Painting Businesses or Businesses outside of your Protected Territory using the Marks or any other marks; (b) 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; (c) use the Marks and System in connection with conducting marketing and promotional activities within it outside the Protected Territory, including marketing and promotional activities related to the solicitation of National Accounts (defined below); (d) use the Marks and System to offer services and products, or related items, or 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 your Protected Territory; (e) 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; (f) acquire, be acquired by, merge, affiliate with or engage in any transaction with other businesses (whether competitive or not), with units located anywhere, and if 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 (g) engage in any other activities not expressly prohibited by the Franchise Agreement. We are not required to pay you for soliciting or accepting orders from inside your Protected Territory.
Source: Item 12 — TERRITORY (FDD pages 38–39)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, 360 Painting has the right to engage in transactions with other businesses, even those operating within a franchisee's protected territory. This includes the possibility of converting such businesses into 360 Painting franchises.
Specifically, 360 Painting retains the right to "acquire, be acquired by, merge, affiliate with or engage in any transaction with other businesses (whether competitive or not), with units located anywhere." This broad authority extends to businesses operating within a franchisee's protected territory. If such a transaction occurs, 360 Painting "may include the conversion such a business to one operated under the Marks and the System." This means that a competing business within your territory could potentially be converted into another 360 Painting franchise.
This clause highlights a potential risk for franchisees. While franchisees are granted a protected territory, this protection is not absolute. 360 Painting retains significant flexibility to expand its brand presence, even if it means introducing another 360 Painting business within an existing franchisee's territory through acquisition and conversion. Prospective franchisees should carefully consider this aspect and its potential impact on their business before investing in a 360 Painting franchise.