What is the meaning of 'exclusive territory' for an All States M.E.D. franchisee?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
of first refusal, or similar rights to acquire additional franchises.
You will receive an exclusive territory, meaning a geographic area within which we promise not to establish either a company-owned or franchised outlet selling the same or similar goods or services under the same or similar trademarks or service marks.
Continuation of your territorial rights does not depend on achieving a certain sales volume, market penetration, or other contingency, and we may not alter your franchise territory, even if there is a population increase in your territory.
We or an affiliate reserves the right to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing sales, to solicit or accept orders within your territory using our principal trademarks.
We or an affiliate also reserves the right to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing sales, to make sales within your territory of products or services under trademarks different from the ones that you will use under the franchise agreement.
Compensation for Internet Sales- We shall use reasonable efforts to compensate you for internet sales made from www.allstatesmed.com . In particular, if a person or business buys medical equipment from www.allstates.med.com from an address in your Territory, we will pay to you the Gross Revenues from the sale less the following items: (i) your Royalty Fee on the sale, (ii) our cost for the item, (iii) any other cost we incur in selling the item (e.g., credit card fees and shipping costs).
You and other franchisees may not solicit (but may accept) orders from consumers outside of your territory, including through the use of other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing, but you may engage in internet and social media marketing pursuant to our guidelines which such marketing may extend outside your territory. We also reserve the right to implement cross-territorial protocols and other guidelines applicable to such situations as group advertising buys by multiple franchisees which may extend into multiple territories, solicitation of orders of individuals who may reside in one territory, yet work in another, and other cross-territorial situations. You agree to abide by any such cross-territorial protocols.
Neither we nor an affiliate operates, franchises, or has plans to operate or franchise a business under a different trademark which such business sells or will sell goods or services similar to those you will offer, but we reserve the right to do so.
Area Developers:
Under the Area Development Agreement (the "ADA"), you will develop, open and operate multiple outlets within a defined Development Area (the "Development Area"). We determine the Development Area using the same criteria that we use in deciding the Territory for a Business.
You will receive an exclusive territory, meaning a geographic area within which we promise not to establish either a company-owned or franchised outlet selling the same or similar goods or services under the same or similar trademarks or service marks.
Source: Item 12 — TERRITORY (FDD pages 27–29)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, an exclusive territory means that All States M.E.D. will not establish another company-owned or franchised outlet selling similar goods or services under the same trademarks within the franchisee's designated geographic area. The territory's size is typically based on a population of around 1,500,000 people and is defined by radius, zip codes, or natural/political boundaries, as specified in the Franchise Agreement. The FDD states that continuation of territorial rights does not depend on achieving specific sales volumes or market penetration, and All States M.E.D. will not alter the territory even if the population increases.
However, All States M.E.D. retains the right to use other distribution channels, such as the Internet, catalog sales, telemarketing, or direct marketing, to solicit or accept orders within the franchisee's territory using their principal trademarks. They also reserve the right to sell products or services under different trademarks within the franchisee's territory through these other channels. All States M.E.D. will use reasonable efforts to compensate franchisees for internet sales made from www.allstatesmed.com from an address in their territory, deducting royalty fees, the cost of the item, and other selling costs before paying the franchisee.
While franchisees cannot actively solicit orders outside their territory, they can accept them. Franchisees can also engage in internet and social media marketing that may extend outside their territory, following All States M.E.D.'s guidelines. All States M.E.D. may implement cross-territorial protocols for situations like group advertising or orders from individuals who live in one territory but work in another, and franchisees must abide by these protocols. All States M.E.D. does not typically approve additional outlets within a franchisee's territory but may grant additional franchise territories if the franchisee has the capacity to manage them. They also do not grant options or rights of first refusal for additional franchises.