Can a Burros Fries franchisee's sales result from Target Marketing activities?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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ITEM 12 TERRITORY
You must operate your Business within the specific location identified in your Franchise Agreement. 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. Subject to the prohibitions set forth in this Item 12, you may face competition from other franchisees and company-owned businesses we operate or from other channels of distribution or competitive brands that we control. You are awarded a protected territory ("Territory") that will include up to three (3) miles driven in any direction from the Franchise Business as defined by MapQuest or a similar mapping program, provided we reserve the right to grant a territory that is larger or smaller than this area described above, in order to account for more densely or sparsely populated areas and other factors. We will determine population based on the most recently published data from the U.S. Census Bureau (or such other source we may indicate to you). You may not conduct business out of any other location other than the accepted location that has been entered in your Franchise Agreement or made part of by an addendum attached to your Franchise Agreement. You may service guests and sell approved retail items to anyone who comes from anywhere so long as your sales do not result from any Target Marketing (as defined below) activities by you. However, you can perform off-site events (such as community events, consumer shows, festivals, expos, etc.) and catering services within your Territory. You may also be able to perform off-site events and/or catering services in geographic areas outside your Territory under certain circumstances (as described below). You may not relocate your Business without our written consent, which we will not unreasonably withhold or delay.
If you are provided with a Territory, we cannot establish either a company-owned business, franchise or license another to locate a Burros & Fries business within your Territory during the term of your Franchise Agreement.
Your licensed Territory is determined by population, business potential, traffic patterns, proximity to major roads, demographics of the surrounding area, available parking, market penetration or other conditions important to the successful operation of your Business, as we deem appropriate and as identified in your Franchise Agreement. Your licensed Territory is determined by us once a location is chosen, and will not be altered even if there is a population increase or decrease. It will also not be affected by your sales volume. In certain cases, if you are in default we may change your Territory. Certain locations, such as major metropolitan areas may have smaller territories of densely populated areas. We must have consented to the location for your Business within your defined Territory in writing before you open for operation.
You must submit a separate application for each Franchised Business to be established by you. You must pay the fee for each additional acquisition mentioned in Item 5 and be in compliance with all of the terms and conditions of your existing Franchise Agreement. We must approve the location of any additional Burros & Fries Businesses as mentioned in Items 11 and 12 above.
If you are provided with a Territory, you are encouraged to directly advertise and market for guests to serve approved menu items, sell retail items and offer catering services within your Territory. You may be able to perform catering services in other geographical areas outside your Territory away from your facility under certain circumstances (as further described below). If the other geographical areas are unassigned, we have the right to sell or assign it, or part of it, at any time, without notice to you and you might not have the right of first refusal or option to buy the territory that was formally unassigned. You may serve guests and sell retail items to anyone who comes from anywhere so long as all such items are being sold from your Business. We, other franchisees and companyowned businesses are subject to the same restrictions and reserve the same right to serve guests and sell retail items to anyone who comes from anywhere without compensation to you. You are prohibited from soliciting and marketing
in general to sell retail items and/or provide catering services by any means outside of your Territory;
Source: Item 12 — TERRITORY (FDD pages 38–40)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, a franchisee's sales cannot result from Target Marketing activities. The FDD states that franchisees may serve guests and sell approved retail items to anyone who comes from anywhere, provided that these sales do not result from Target Marketing. Target Marketing is defined as a concerted effort by a franchisee to solicit and obtain business through any type of advertisement or marketing directed at all or a portion of another franchisee's territory. Burros Fries will use commercially reasonable efforts to enforce this requirement if a franchisee violates it.
This policy means that while Burros Fries franchisees can serve customers from any location, they are restricted from actively targeting customers within another franchisee's territory through advertising or marketing efforts. This is designed to protect each franchisee's customer base and prevent unfair competition between franchise locations.
However, franchisees are allowed to conduct off-site events and catering services within their own territory. They may also perform these activities outside their territory under certain circumstances, such as if the other geographical areas are unassigned or with the consent of the franchisee in that area or directly from Burros Fries. If another franchisee or company-owned business exists in the area, the request must be referred to them or to Burros Fries, and their determination will dictate whether the off-site event or catering service can proceed. If the area is unassigned, the franchisee can proceed but must be prepared to refer the business to another franchisee when the area is purchased.
Burros Fries also encourages franchisees within a ten-mile radius of each other to develop referral relationships and advertising strategies, provided that Burros Fries is notified of these arrangements. This suggests a collaborative approach to marketing within close proximity, balancing the need to protect individual territories with the benefits of cooperative advertising.