What is the effect on a Cilantro Taco Grill franchisee's territory if they are in default of their obligations?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
During the term of your Franchise Agreement, and provided that you are not in default of your Franchise Agreement, we will not open another Cilantro Taco Grill outlet or grant the right to anyone else to open a Cilantro Taco Grill outlet within your Territory. However, we reserve all rights to sell, either directly or through others, our products and services under the Marks in the Territory through alternative distribution channels.
There are no minimum sales volumes, market penetration or any other contingencies that will affect your limited protected right to operate in the Territory during the term of your Franchise Agreement, unless you are in default of your obligations to us.
Source: Item 12 — TERRITORY (FDD pages 33–35)
What This Means (2024 FDD)
According to the 2024 Cilantro Taco Grill Franchise Disclosure Document, a franchisee's protected territory is contingent upon remaining in compliance with the Franchise Agreement. Specifically, if a Cilantro Taco Grill franchisee defaults on their obligations to the franchisor, the limited protected right to operate in the designated territory may be affected.
This means that while a franchisee in good standing benefits from Cilantro Taco Grill's commitment not to open another outlet or grant franchise rights to others within their territory, this protection is not guaranteed if the franchisee fails to meet their contractual obligations. Defaulting on the Franchise Agreement could lead to a loss of territorial rights, potentially allowing Cilantro Taco Grill to establish additional outlets or authorize other franchisees within the original franchisee's territory.
It is important to note that Cilantro Taco Grill franchisees do not receive an exclusive territory. They may face competition from other franchisees, from outlets that Cilantro Taco Grill owns, or from other distribution channels or competitive brands that Cilantro Taco Grill controls. Prospective franchisees should carefully review the Franchise Agreement to fully understand the conditions that constitute a default and the potential consequences regarding their territory.