What Royalty Rate does a Casiola franchisee pay for Out of Territory Customers?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
- (1) Franchisee must conduct the operations of the Franchised Business from within Franchisee's Operating Market and Franchisee must provide the Approved Services and Products on behalf of customers located within Franchisee's Operating Market. The marketing of the Franchised Business must be targeted to Franchisee's Operating Market and, at all times, must conform and comply with, among other things, the restrictions set forth in Article 9.G. of this Agreement;
- (2) Provided that Franchisee: (i) does not engage in any Direct Solicitation of customers or potential customers outside of Franchisee's Operating Market or, within the Operating Market of another Casiola Business, (ii) Franchisee does not otherwise violate the restrictions set forth in Article 9 of this Agreement, and (iii) unless otherwise directed by Franchisor at any time, from time to time, and in Franchisor's sole direction, Franchisee may provide Approved Services and Products to a customer in an Open Area surrounding Franchisee's Operating Market. Upon written notice from Franchisor for any reason or no reason at all, Franchisee must discontinue from providing Approved Services and Products in an Open Area; and
- (3) Once an Open Area becomes an Assigned Area, Franchisee shall cease communicating with customers previously serviced by Franchisee in the Open Area and Franchisee shall turnover to Franchisor, for the benefit of Franchisor or, another Casiola Business, all information and records related to the Approved Services and Products provided within the Open Area.
Nothing contained in this Article 3.I. shall expand either the non-exclusive franchise rights granted to franchisee in Article 2 of this Agreement or, Franchisee's Operating Market and, in the event of any inconsistency or conflict between the terms of this Article 3.I. and Article 2, Article 2 shall take precedence and govern.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
The 2024 Casiola Franchise Disclosure Document does not specify a royalty rate for customers served outside of a franchisee's designated territory. However, the FDD does outline rules regarding out-of-territory operations. Casiola franchisees must operate their business and provide services to customers within their assigned Operating Market. Marketing efforts must also target this specific area and comply with the agreement's restrictions.
Under certain conditions, a Casiola franchisee may serve customers in an open area surrounding their Operating Market. These conditions include refraining from directly soliciting customers outside their territory or within another franchisee's territory and adhering to Article 9 of the agreement. Casiola retains the right to direct a franchisee to discontinue services in an open area at any time, for any reason.
If an open area becomes an assigned area, the Casiola franchisee must stop communicating with customers previously serviced in that area and transfer all related information and records to Casiola or another franchisee. The FDD states that these out-of-territory provisions do not expand the franchisee's rights and that Article 2 of the agreement takes precedence in case of any conflict. Since the document does not specify royalty rates for out-of-territory customers, it is important for potential franchisees to clarify this with Casiola during their due diligence.