Can Christian Brothers Automotive operate a company-owned outlet in the franchisee's territory?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
2.01 Territorial Grant. The territory granted to Franchisee by Franchisor which is subject to the terms of this Agreement shall be the area designated on Exhibit "A" attached to this Agreement (the "Territory"). Except as expressly provided to the contrary herein, Franchisee shall have the sole and exclusive right to solicit the sale of the Services within the Territory.
2.02 Franchisor Restrictions. Franchisor will not operate a Franchisor-owned outlet of the type franchised hereunder or grant a franchise for the operation of a similar or competitive business in the Territory, except as provided in Section 2.04 of this Agreement ("Rights Reserved By Franchisor").
2.03 Franchisee Restrictions. During the term hereof, Franchisee's rights hereunder shall be limited to offering and selling only the Services in the Territory, in accordance with the terms of this Agreement. Franchisee shall not, without Franchisor's express written consent, solicit, sell or perform any Services outside the Territory. Should Franchisee
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Agreement, franchisees are granted a territory as designated on Exhibit "A" of the agreement. Christian Brothers Automotive agrees that, except as expressly provided in Section 2.04, it will not operate a company-owned outlet of the type franchised or grant a franchise for a similar or competitive business in the franchisee's territory. This clause ensures that franchisees have the sole and exclusive right to solicit the sale of services within their designated territory, offering a degree of market exclusivity.
This territorial protection is a significant benefit for franchisees as it reduces the risk of direct competition from the franchisor or other franchisees within the same area. However, the agreement also notes that there are exceptions to this exclusivity, as detailed in Section 2.04, which are "Rights Reserved By Franchisor". It is important for prospective franchisees to understand the specifics of Section 2.04 to fully grasp the scope and limitations of their territorial rights.
Franchisees are restricted to offering and selling only the services within their territory and must obtain express written consent from Christian Brothers Automotive to solicit, sell, or perform any services outside of their designated area. This ensures that franchisees focus their efforts within their assigned territory and do not encroach on other franchisees' areas, maintaining a clear and organized market division. Prospective franchisees should carefully review Exhibit A and Section 2.04 to understand the exact boundaries of their territory and any rights reserved by Christian Brothers Automotive.