What are the possible outcomes for a Gray Area where a Bath Tune Up franchisee is operating?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Gray Area are subject to sale of the territory to another franchisee, to initiation of "company-owned" operations in the Gray Area, and to Franchisor's rules and regulations, including that any advertising in Gray Area can only include Franchisor's toll-free telephone number, and not the local telephone number of Franchisee.
Franchisee does not receive any right of first refusal or other rights of any type to a Gray Area by virtue of operations in that Gray Area. Franchisor may sell any Gray Area territory at any time, without advance notice to Franchisee. Upon notice from Franchisor, Franchisee will immediately cease all marketing activities in any Gray Area. Franchisor may give a notice to cease marketing without regard to whether the Gray Area has been sold to another franchisee. After Franchisor gives notice to cease marketing, Franchisee may (for a maximum of 30 days) complete installations of Bath Improvements for which orders were completed before Franchisor gave Franchisee notice to cease marketing in the area.
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Source: Item 16 — RESTRICTION ON WHAT FRANCHISEE MAY SELL (FDD pages 37–38)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, a "Gray Area" is an unassigned territory where a franchisee may be permitted to operate. However, Bath Tune Up retains significant control and rights over these areas. Bath Tune Up has the right to sell or assign a Gray Area, or any part of it, at any time without providing notice to the franchisee who may be operating there. The franchisee does not have a right of first refusal or an option to purchase a territory that was previously designated as a Gray Area.
If Bath Tune Up decides to sell or assign a Gray Area where a franchisee is operating, the franchisee must immediately cease all marketing activities in that area upon notification from Bath Tune Up. This notice to cease marketing can be given regardless of whether the Gray Area has been sold to another franchisee. The franchisee is, however, allowed a maximum of 30 days after the notice to complete installations for Bath Improvements for which orders were finalized before the notification.
While operating in a Gray Area, the Bath Tune Up franchisee is still responsible for paying the National Advertising Fee, which is the greater of 1% of the franchisee's monthly Gross Revenue or $500. This fee applies to all revenue, including work performed in the Gray Area. Bath Tune Up can increase this amount up to 2% of the franchisee's monthly Gross Revenue. This means that even though the franchisee doesn't have any guaranteed rights to the Gray Area, they are still obligated to contribute to the National Advertising Fund based on the revenue generated from that area.