What is the geographic nature of the 'Designated Territory' granted to an Amerispec Inspection Services franchisee?
Amerispec_Inspection_Services Franchise · 2025 FDDAnswer from 2025 FDD Document
time to time by the Company.
- 2.6 Franchised Business shall mean the business franchised under this Agreement to operate utilizing the System of Operation and the Names and Marks.
- 2.7 Designated Territory shall mean the geographic area described in Paragraph 3.1 of this Agreement. The Company will designate a territory within which the Franchisee will perform services. The Franchisee's Designated Territory will consist of a contiguous area. We consider total population and relative affluence to determine a territory. The Company uses the current United States Census Bureau figures when considering population estimates.
- 2.8 Office. Whenever the term "office" is used in this Agreement in reference to the office of the Franchised Business, that term shall refer to the principal business office initially established by the Franchisee under this Agreement except in Paragraph 15, where the term office shall mean any office used by the Franchisee during the two (2) year period prior to the termination or expiration of this Agreement, or the assignment of this Agreement or of the Franchised Business.
3. GRANT OF FRANCHISE AND RENEWAL OF FRANCHISE
3.1 Protected Territory Appointment. The Company hereby grants to the Franchisee, and the Franchisee undertakes the obligation, upon the terms and conditions contained in this Agreement, a protected right and a license to operate a business offering the System of Operation (the "Franchised Business "), and to use solely in connection with the Franchised Business the Company's System of Operation, and to use the Names and Marks of the Company in the conduct of a variety of single family and multifamily commercial building inspection services, as those services may be changed, improved, and further developed from time to time, within the territory described in Exhibit A (the "Designated Territory" or "Territory"). "Protected" means that the Company will not enter into a Franchise Agreement licensing another Franchisee inside the
Designated Territory; except as provided for in Paragraph 3.1.1, Paragraph 3.1.2 and Paragraph 3.1.6 of this Agreement. The Franchisee may retain "protected" status of its Designated Territory upon meeting the performance and other criteria set forth in Paragraph 3.1.1 and Paragraph 3.1.2 below. Notwithstanding the foregoing, the provisions of Paragraph 3.1.1 and Paragraph 3.1.2 shall not be enforced during any 12-month period if the Franchisee, its principal manager, or its majority shareholder, member, or partner dies during such 12-month period.
- 3.1.1 For new Territory, Franchisee must have achieved (a) revenue growth over the trailing 3 years; (b) at least 3% market share and either (c) a revenue percentage increase from Year 2 to Year 3 that is equal to or greater than the percentage increase of Real Estate Transactions ("RETs") in Franchisee's assigned Designated Territory for this Agreement or (d) a revenue percentage increase from Year 2 to Year 3 that is equal to or less than the percentage decrease of RETs in Franchisee's Designated Territory for this Agreement, as well as maintained good standing as a brand ambassador by timely payment of monthly fees, proper use of Company trade names, trademarks and system of operations, support of National Account Programs, and compliance with all other obligations of the Franchise Agreement.
- 3.1.2 For existing Territory, Franchisee must have achieved: (a) at least 3% market share, and (b) a revenue percentage increase over a 5-year period that is equal to or greater than the 5-year average increase in the RETs in the assigned Designated Territory for this Agreement or (c) a revenue percentage increase over a 5-year period that is equal to or less than the 5-year average decrease of RETs in Franchisee's Designated Territory for this Agreement, as well as maintained good standing as a brand ambassador by timely payment of monthly fees, proper use of Company tradenames, trademarks and system of operations, support of National Account Programs, and compliance with all other obligations of the Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 47–172)
What This Means (2025 FDD)
According to Amerispec Inspection Services' 2025 Franchise Disclosure Document, the Designated Territory is a protected geographic area described in Exhibit A of the Franchise Agreement. This territory grants the franchisee the right to operate an inspection business using Amerispec Inspection Services' system and trademarks. The company will not license another franchisee within the Designated Territory, offering a degree of exclusivity, with exceptions outlined in Paragraphs 3.1.1, 3.1.2, and 3.1.6 of the agreement. The franchisee's ability to maintain this protected status depends on meeting specific performance and other criteria detailed in Paragraphs 3.1.1 and 3.1.2. However, these performance criteria are waived for a 12-month period if the franchisee, their principal manager, or majority shareholder dies.
The Designated Territory will consist of a contiguous area, and Amerispec Inspection Services considers total population and relative affluence when determining the territory. The company uses current United States Census Bureau figures for population estimates. The franchisee must operate the franchised business within the territory from an office location specified on Page 1 of the agreement, and any relocation within the territory requires written approval from Amerispec Inspection Services, requested at least 30 days in advance. At the franchisee's request, Amerispec Inspection Services will provide a map indicating the geographic area of the Designated Territory.
Amerispec Inspection Services retains the right to operate a similar business or grant rights to other franchisees outside the Designated Territory, even if it competes for customers within the franchisee's territory. If the franchisee fails to meet the criteria to maintain protected status, Amerispec Inspection Services can operate or grant rights to others to operate a similar business even inside the franchisee's Designated Territory. The franchisee is allowed to perform services outside their Designated Territory only if the customer initiates the request. However, franchisees are prohibited from directing marketing or solicitation activities to agents or customers outside of their designated territory.