What is the nature of the protected area granted to a Batteries Plus Bulbs franchisee?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of this Agreement (as described in Section 3) and subject to Section 2(D) below, if Franchisee is in compliance, Franchisor will not directly operate or franchise another to operate any other full-service Batteries Plus® store within the Protected Area.
The license granted to Franchisee under this Agreement is personal in nature, may not be used at any location other than the Store, does not include the right to sell products or services identified by the Licensed Marks at any location other than at the Store, and does not include the right to sell products or services identified by the Licensed Marks through any other channels of distribution, including the Internet (or any other existing or future form of electronic or digital commerce).
Franchisee will not open any other Batteries Plus® store in the Protected Area.
Franchisee will not have the right to subfranchise or sublicense any of its rights under this Agreement.
Franchisee will not use the Store for any purposes other than the operation of a Batteries Plus® store.
Source: Item 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs FDD, a franchisee is granted a protected area, the specifics of which are outlined in Exhibit A of the Franchise Agreement. During the term of the agreement and contingent upon the franchisee's compliance, Batteries Plus Bulbs will not operate or franchise another full-service Batteries Plus Bulbs store within the franchisee's protected area. The franchisee is prohibited from opening another Batteries Plus Bulbs store within their protected area and cannot subfranchise or sublicense their rights. The store must be used solely for operating a Batteries Plus Bulbs store. The protected area is defined in Exhibit A as either a radius of three miles from the store's location or a geographic area with a residential population of 150,000 people.
However, Batteries Plus Bulbs retains certain rights within and outside the protected area. They can operate or franchise other stores outside the protected area and sell products and services under different trademarks through various channels. While franchisees have limited rights regarding e-commerce transactions within their "E-Commerce Territory," Batteries Plus Bulbs can sell products and services under the Licensed Marks through other channels, including the internet, both within and outside the protected area. The "E-Commerce Territory" is defined as the lesser of a 20-mile radius from the store or an area encompassing a commercially reasonable estimate of a current population of 250,000.
Prospective Batteries Plus Bulbs franchisees should be aware that the protected area does not provide complete exclusivity. Batteries Plus Bulbs retains significant rights to operate and franchise other stores outside the protected area and to sell products and services through alternative channels, including online sales. The franchisee's market area, which extends 20 miles from the store, is relevant to advertising restrictions, as the franchisee needs prior written consent to solicit customers outside this area. Understanding the interplay between the protected area, e-commerce territory, and Batteries Plus Bulbs's retained rights is crucial for assessing the potential market and competition a franchisee may face.