Can Cilantro Taco Grill operate other kinds of businesses within a franchisee's territory?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
We reserve all rights not expressly granted in the Franchise Agreement. For example, we or our affiliates may own, operate or authorize others to own or operate Cilantro Taco Grill outlets outside of the Territory and may operate other kinds of businesses within the Territory. Although we do not currently do so and have no plans to do so, we and our affiliates may own, acquire, conduct, or authorize others to conduct, any form of business at any location selling any type of product or service not offered under the Marks, including a product or service similar to those you will sell at your Franchised Business. We reserve the right to merge with, acquire, or be acquired by, an existing competitive or non-competitive franchise network, chain, or other business; however, we will not convert any acquired business in your Territory to a franchise using our primary trademarks during the Term of your Franchise Agreement.
We and our affiliates may sell products and services under the Marks within or outside the Territory through any method of distribution other than a dedicated Cilantro Taco Grill outlet location, such as distribution through retail outlets, including but not limited to, grocery stores; ghost kitchens; co-branding with other food outlets; in captive market locations, such as airports, stadiums, institutional/professional campuses and conferences; and the Internet ("Alternative Distribution Channels"). You will receive no compensation for our sales through Alternative Distribution Channels in the Territory. You may not use Alternative Distribution
Source: Item 12 — TERRITORY (FDD pages 33–35)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, Cilantro Taco Grill retains the right to operate other types of businesses within a franchisee's territory. Specifically, Cilantro Taco Grill or its affiliates have the right to own, operate, or authorize others to operate Cilantro Taco Grill outlets outside of a franchisee's territory and may operate other kinds of businesses within the territory.
This means that even though a franchisee is granted a territory, Cilantro Taco Grill is not restricted from engaging in other business ventures within that same territory. These ventures could potentially compete with the franchisee's Cilantro Taco Grill outlet. However, Cilantro Taco Grill states that it will not convert any acquired business in the franchisee's territory to a franchise using their primary trademarks during the term of the Franchise Agreement.
Furthermore, Cilantro Taco Grill and its affiliates can sell products and services under the Cilantro Taco Grill trademarks within or outside the territory through alternative distribution channels. These alternative channels include retail outlets like grocery stores, ghost kitchens, co-branding with other food outlets, captive market locations such as airports and stadiums, and the Internet. Franchisees will not receive any compensation for sales made through these alternative distribution channels within their territory. However, Cilantro Taco Grill will include a listing of the franchisee's Cilantro Taco Grill outlet location on its website, allowing customers to place online orders for pick-up or delivery.
This arrangement means that while franchisees have the right to operate their Cilantro Taco Grill outlet within their designated territory, they may face competition from Cilantro Taco Grill's other business activities and alternative distribution channels. Franchisees are also restricted from using these alternative distribution channels to make sales inside or outside their territory and may not solicit or accept orders from customers outside their territory.