Does Chop5 Salad Kitchen provide territorial protections during the term of the ADA?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
en-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.
Territorial Protections and Limitations
During the term of your Franchise Agreement we will not develop or operate, or license a third party to develop or operate, a Restaurant using our Marks that is physically located within your territory except as otherwise permitted below with respect to Captive Venues and Acquisitions (each defined below).
During the term of your ADA (if applicable) we will not develop or operate, or license a third party to develop or operate, a Restaurant using our Marks that is physically located within your development territory during the term of the ADA other than: (a) any Restaurant that is located within your development territory as of the date you sign the ADA (either open, under construction or for which a Franchise Agreement has been signed); and (b) as otherwise permitted below with respect to Captive Venues and Acquisitions.
We reserve 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 your 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. Examples of Captive Venues include Restaurants that are located within:
- hotels or casinos
- college campuses or universities
- airports, train stations, bus stations or cruise terminals
- stadiums or sporting arenas
- shopping malls
- military bases
- concert venues
- amusement parks
We also reserve 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 (an "Acquisition"). Any such acquired or converted businesses may be located within your territory and development territory, if applicable.
Alternative Channels of Distribution
We reserve 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 your 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. Examples of Alternative Channels of Distribution include:
- sales through direct marketing, such as over the Internet or through catalogs or telemarketing
- sales through retail stores that do not operate under the Marks, such as grocery stores or convenience stores
- sales made at wholesale
- sales through catering or delivery service
- sales through kiosks or mobile trailers
You are not entitled to any compensation for sales that take place through Alternative Channels of Distribution.
Source: Item 12 — TERRITORY (FDD pages 36–38)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, if you acquire area development rights (ADA), you may receive territorial protections. The boundaries of your development territory will be identified in Part C of ATTACHMENT "A" to your ADA, typically coinciding with a municipality's boundaries like a city, county, or state. The size of the territory depends primarily on the number of Chop5 Salad Kitchen restaurants you commit to developing.
During the term of the ADA, Chop5 Salad Kitchen will not develop or operate, nor license a third party to do so, a restaurant using their marks within your development territory. This protection does not apply to restaurants already in the territory when you sign the ADA or to Captive Venues and Acquisitions. If you fail to meet your development schedule by not opening the required number of restaurants in the specified time, Chop5 Salad Kitchen may terminate your ADA, and you will lose the territorial protections.
However, Chop5 Salad Kitchen retains the right to operate or license third parties to operate restaurants in Captive Venues, even within your territory. Captive Venues are non-traditional locations within other establishments like hotels, college campuses, airports, shopping malls, or military bases. Chop5 Salad Kitchen also reserves the right to acquire other businesses that may be converted into Chop5 Salad Kitchen restaurants, regardless of their location, even within your protected territory.
Additionally, Chop5 Salad Kitchen reserves the right to sell through Alternative Channels of Distribution, such as internet sales, catering, or kiosks, even within your territory. You will not receive compensation for sales through these alternative channels. You can market outside your territory as long as you comply with Chop5 Salad Kitchen's policies and do not engage in targeted marketing into another franchisee's territory, unless it is part of a cooperative advertising effort.