Does Chop5 Salad Kitchen grant franchisees an exclusive territory?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
cost of these updates or upgrades.
ITEM 12 TERRITORY
You will not receive an exclusive territory or development 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.
Restaurant Location
Each Franchise Agreement grants you the right to operate one Restaurant from a site we approve. You must identify a site for your Restaurant within the Site Selection Area described in Part C of ATTACHMENT "A" to your Franchise Agreement.
You may relocate your Restaurant with our prior written approval, which we will not unreasonably withhold. If we allow you to relocate, you must: (a) engage the Real Estate Company to provide Real Estate Management Services and pay the associated fee; (b) obtain our approval of the site for your new Restaurant within the Site Selection Area (but outside any territory granted or reserved to us, our affiliate or any other franchisee); (c) comply with our then-current site selection and development requirements; (d) remove trade dress and alter the premises of the closed (i.e., former) Restaurant to eliminate any resemblance to a CHOP5 Salad Kitchen; (e) pay us a relocation fee of $5,000 at the time we approve your request to relocate; (f) pay the Project Manager a $15,000 project management fee; and (g) open your Restaurant at the new site and resume operations within 30 days* after closing your Restaurant at the former site.
* If your Restaurant is destroyed, condemned or otherwise rendered unusable due to the physical condition of the premises, you will instead have 180 days to relocate and resume operations at the new site.
Description of Territory (Franchise Agreement)
Your territory will consist of the geographic area within a ½-mile radius from your Restaurant. Upon renewal, we reserve the right to modify the boundaries of your territory in accordance with our then-current territory guidelines and criteria.
Description of Development Territory (ADA)
If you acquire area development rights, we will identify the boundaries of your development territory in Part C of ATTACHMENT "A" to your ADA. A development territory typically consists of a geographic area that coincides with the boundaries of a municipality, such as a city, county or state. There is no specific minimum or maximum size for a development territory. In determining the size of your development territory, we primarily consider the number of Restaurants you commit to develop.
You must sign a separate Franchise Agreement for each Restaurant you develop. All Restaurants you develop must be located within your development territory. We must approve the site for each Restaurant you develop under our then-current site selection criteria. We send you a complete execution copy of the ADA that includes your development territory, development fee and development schedule at least 7 days before you sign it.
Source: Item 12 — TERRITORY (FDD pages 36–38)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, franchisees do not receive an exclusive territory. The FDD states that franchisees may face competition from other franchisees, outlets that Chop5 Salad Kitchen owns, or other channels of distribution or competitive brands that Chop5 Salad Kitchen controls. However, the franchise agreement does grant the right to operate one restaurant from an approved site. The territory consists of the geographic area within a ½-mile radius from the restaurant. Upon renewal, Chop5 Salad Kitchen reserves the right to modify the boundaries of the territory.
If a franchisee signs an Area Development Agreement (ADA), Chop5 Salad Kitchen will identify the boundaries of the development territory in Part C of ATTACHMENT "A" to the ADA. A development territory typically consists of a geographic area that coincides with the boundaries of a municipality, such as a city, county, or state. There is no specific minimum or maximum size for a development territory. In determining the size of the development territory, Chop5 Salad Kitchen primarily considers the number of restaurants the franchisee commits to develop. During the term of the ADA, Chop5 Salad Kitchen will not develop or operate, or license a third party to develop or operate, a restaurant using their Marks that is physically located within the development territory.
Chop5 Salad Kitchen also reserves the right to develop and operate, and license third parties to develop and operate, restaurants that are located in Captive Venues, including Captive Venues located within the franchisee's territory and development territory, if applicable. A "Captive Venue" means a non-traditional outlet for a Restaurant that is located within, or is a part of, another establishment or facility that consumers may visit for a purpose unrelated to the Restaurant. Chop5 Salad Kitchen also reserves the right to acquire, or be acquired by, another business or chain that may sell competitive or identical goods or services, and those businesses may be converted into Restaurants operating under the Marks regardless of their location.
Chop5 Salad Kitchen also reserves the right to sell, and license others to sell, competitive or identical goods and services (either under the Marks or different trademarks) through Alternative Channels of Distribution, including within the franchisee's territory and development territory, if applicable. An "Alternative Channel of Distribution" means any channel of distribution other than retail sales made to customers while present at a Restaurant. The franchisee is not entitled to any compensation for sales that take place through Alternative Channels of Distribution.