Does Auntie Annes grant franchisees an exclusive territory?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 12: TERRITORY]
Shop Location
Your Shop may only be operated at the Accepted Location. If we have not yet accepted a site for the Full Shop when we execute the Franchise Agreement, you must select a location that we accept in accordance with our site selection criteria within a site selection area that we specify. We will determine the site selection area on a case-by-case basis. You will have no exclusive or protected rights in your site selection area.
If you operate a Concession Shop, you will be required to submit all locations from which you will operate the Concession Shop in advance for our written approval, which will each be considered to be an Accepted Location. In most cases, we will not approve the operation of a Concession Shop within two miles of a permanent Full Shop location.
No Exclusive Territory
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
No Protected Territory for All Shops other than Co-Branded Shops in Streetside Locations
This Section applies to all Shops other than Co-Branded Shops in Streetside Locations.
The Franchise Agreement licenses you to manufacture and sell Approved Products at retail only from the specific Shop location that we accepted. We do not grant you any exclusive territory or other territorial rights under these agreements other than the right to sell Approved Products at retail from the Shop.
Limited Protected Territorial Rights for Co-Branded Shops in Streetside Locations
This Section applies only to Co-Branded Shops in Streetside Locations.
If you operate a Co-Branded Shop in a Streetside Location, while you will not receive an exclusive territory, you will receive a territory with limited protected rights (an "Area of Protection") as described in this Item. This means that, during the term of the Franchise Agreement, we will not establish or operate, nor license any other person to establish or operate, another Co-Branded Shop at a Streetside Location within the Area of Protection. For the avoidance of doubt, we may operate, or license others to operate, single-branded Shops or Shops that do not include the exact combination of brands as the Co-Branded Shop (such as a Shop that is co-branded with a brand other than the second brand in the Co-Branded Shop or that is multi-branded with such second brand and one or more other brands).
We may negotiate your Area of Protection with you. The size and scope of the Area of Protection will be in the Franchise Agreement and will be determined on a case-by-case basis. The Area of Protection will not exceed a one-block radius for a Shop in an urban location (the downtown area of the 100 largest U.S. cities as measured by population as of the effective date of the Franchise Agreement) or a one-mile radius for a Shop in any non-urban location. There is no minimum Area of Protection for a Shop. The factors that we consider in determining the size of an Area of Protection include current and projected market demand, demographics and population based on our research and experience, median household income, presence of other businesses, location
Source: Item 12 — TERRITORY (FDD pages 77–80)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, franchisees generally do not receive an exclusive territory. The standard Franchise Agreement licenses franchisees to manufacture and sell approved products only from their specific shop location. This means that Auntie Annes does not grant any exclusive territory or other territorial rights, other than the right to sell approved products at retail from the shop. As a result, franchisees may face competition from other franchisees, outlets that Auntie Annes owns, other distribution channels, or competitive brands that Auntie Annes controls.
However, there is an exception for Co-Branded Shops in Streetside Locations. While these franchisees do not receive an exclusive territory, they may receive a territory with limited protected rights, referred to as an "Area of Protection." During the term of the Franchise Agreement, Auntie Annes will not establish or operate, nor license any other person to establish or operate, another Co-Branded Shop at a Streetside Location within the Area of Protection. Auntie Annes may negotiate the Area of Protection with the franchisee, with the size and scope detailed in the Franchise Agreement on a case-by-case basis. The Area of Protection will not exceed a one-block radius for a shop in an urban location or a one-mile radius for a shop in any non-urban location, and there is no minimum area of protection.
Auntie Annes retains significant rights, including the right to establish or license franchises and/or company or affiliate-owned businesses offering similar products under the Proprietary Marks or any other marks anywhere, including near a franchisee's accepted location, if an Area of Protection is not granted. They may also produce and/or sell approved products or any other products or services through any alternative channel of distribution, such as supermarkets, e-commerce, or ghost kitchens, whether inside or outside any Area of Protection. These reserved rights and the potential for competition from various channels are important considerations for prospective franchisees.