Does the Big O Tires Franchise Agreement grant an exclusive territory to the franchisee?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Your Franchise Agreement grants to you the right to operate one Big O store at a single location. However, subject to the limitations described in this Item 12, we agree not to operate for our self or grant to any other person the right to operate any more than one Big O Store for every 50,000 persons residing in your Trade Area. Trade Area is defined in Schedule 1 to the Franchise Agreement. We may, in our discretion, redefine the Trade Area as population increases or moves within your Trade Area. In light of the limitations on your territorial rights described in this Item 12, we make the following disclosure: 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.
Absent your approval before we do so, we will not permit the establishment or operation of another Big O Store within a two mile radius (as determined by us in our discretion) of your Store, but after you give approval to a Store within the two miles radius, that approval may not be revoked and remains in effect for that Store location, regardless of change of ownership, transfer, closing and reopening or other changes. Moreover, subject to the conditions described below, if we or any prospective franchisee propose to open a Big O Store within a five mile radius (as determined by us in our reasonable discretion) of your Store (other than by a franchisee converting an independent retail tire store to a Big O Conversion Store and other than the relocation of an existing Big O franchise that has been approved by us), you will be notified of your first option ("First Option") to acquire a franchise for the additional Store. You may exercise your First Option only if (i) you are in compliance with the terms of your Franchise Agreement, as determined by Big O, (ii) you meet our then current criteria for new franchisees, and (iii) except as otherwise provided in a separate written agreement with us, if you are a Business Format Franchisee, all Stores owned or operated by you or an affiliate of yours are Business Format Franchises or have signed agreements to become Business Format Franchises.
Source: Item 12 — TERRITORY (FDD pages 73–75)
What This Means (2025 FDD)
According to Big O Tires's 2025 Franchise Disclosure Document, the Franchise Agreement does not grant an exclusive territory to the franchisee. While the agreement grants the right to operate one Big O Tires store at a single location, Big O Tires retains the right to operate or grant others the right to operate additional Big O Tires stores, with a general guideline of one store per 50,000 people in the Trade Area. The Trade Area itself can be redefined by Big O Tires as population shifts.
This means that a Big O Tires franchisee may face competition from other franchisees, company-owned outlets, or other distribution channels and competitive brands controlled by Big O Tires. However, Big O Tires will not allow another Big O Tires store to be established within a two-mile radius of a franchisee's store without the franchisee's approval. If Big O Tires plans to open a store within a five-mile radius (excluding conversions of independent stores or relocations of existing franchises), the franchisee has a first option to acquire a franchise for the additional store, provided they are in compliance with the Franchise Agreement and meet the current criteria for new franchisees.
Prospective franchisees should be aware that failing to execute a Successor Franchise Agreement before the last 15 months of the current agreement results in losing any first option rights, exclusivity rights, and rights related to the Trade Area during those final 15 months. This lack of an exclusive territory is a common arrangement in the franchise industry, allowing franchisors flexibility in market development but potentially increasing competition for franchisees.