Are Batteries Plus Bulbs' rights absolute under the agreement?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
Subject to earlier termination as provided herein, this Agreement is for a term commencing on the date executed and expiring on the last day of the last Development Period as stated in the Development Schedule. Franchisor (for itself and its affiliates) retains the right: (1) to itself own and operate, and to grant other persons the right to own and operate, Batteries Plus® stores at locations outside the Designated Area, who may offer products and services within the Designated Area, and on conditions as Franchisor deems appropriate; (2) to sell within and outside the Designated Area the products and services authorized for sale at Batteries Plus® stores under trademarks and service marks other than the Licensed Marks through similar or dissimilar channels of distribution and pursuant to conditions Franchisor deems appropriate; (3) to sell the products and services authorized for sale at Batteries Plus® stores under the Licensed Marks through dissimilar channels of distribution (i.e., other than the operation of full-service retail Batteries Plus® stores), including by electronic means such as the Internet and by websites established by Franchisor, and pursuant to conditions Franchisor deems appropriate within and outside the Designated Area; and (4) to advertise the System on the Internet (or any other existing or future form of electronic or digital commerce) and to create, operate, maintain and modify, or discontinue the use of a website using the Licensed Marks.
Source: Item 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs FDD, the franchisor retains specific rights that could impact a franchisee's operations, even within their designated area. Batteries Plus Bulbs retains the right to operate or franchise others to operate stores outside the Designated Area, who may offer products and services within the Designated Area. They can also sell products and services authorized for sale at Batteries Plus Bulbs stores under different trademarks through various distribution channels, both within and outside the Designated Area. Batteries Plus Bulbs also retains the right to sell products and services authorized for sale at Batteries Plus Bulbs stores under the Licensed Marks through dissimilar channels of distribution, including online. Finally, Batteries Plus Bulbs can advertise the System on the Internet and manage a website using the Licensed Marks. These retained rights allow Batteries Plus Bulbs to compete with its own franchisees through other channels and brands.
For a prospective franchisee, this means that while they may have a protected area, Batteries Plus Bulbs can still operate or franchise other stores outside this area that may draw customers from within it. Additionally, Batteries Plus Bulbs can sell the same products and services through other channels, such as online, potentially competing directly with the franchisee. The franchisee's agreement is subject to these rights retained by Batteries Plus Bulbs.
This type of arrangement is not uncommon in franchising, as franchisors often need to maintain control over their brand and explore different distribution channels. However, it's crucial for a potential Batteries Plus Bulbs franchisee to understand the extent of these retained rights and how they might affect their business. Franchisees should carefully consider the potential impact of these competitive channels on their store's performance and profitability.