Is the territory granted to a Burros Fries franchisee exclusive?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 12 — TERRITORY (FDD pages 38–40)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, franchisees do not automatically receive an exclusive territory. The FDD states, "You will not receive an exclusive territory." However, Burros Fries does award a protected territory, which is referred to as the "Territory." This Territory includes up to three miles driven in any direction from the franchise location, though Burros Fries retains the right to adjust the size of the territory based on population density and other factors. The population is determined using data from the U.S. Census Bureau or another source indicated by Burros Fries.
Within this Territory, Burros Fries agrees not to establish company-owned businesses, franchises, or license others to open a Burros & Fries business during the term of the Franchise Agreement. This provides some level of protection for the franchisee's investment. However, franchisees may still face competition from other franchisees, company-owned outlets, other distribution channels, or competitive brands controlled by Burros Fries.
Burros Fries encourages franchisees within a ten-mile radius of each other to develop referral relationships and advertising strategies, requiring notification of such arrangements. Burros Fries also reserves significant rights, including the ability to advertise and sell branded products through various channels, regardless of a franchisee's territory. They can also sell products through alternative distribution channels and implement advertising cooperative programs that may impact a franchisee's business. These reserved rights mean that while a franchisee has some territorial protection, Burros Fries retains considerable control over the brand's overall marketing and distribution strategy, which could potentially affect individual franchise performance.