Under what conditions can Cinch I.T. alter a franchisee's Designated Territory?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
You maintain your rights to your Designated Territory as long as you abide by the terms of your Franchise Agreement. We may not alter your Designated Territory without your consent.
We will not establish or license another to establish any other CINCH I.T. businesses within your Designated Territory while your Franchise Agreement is in effect and you are not in default.
You do not receive an automatic the right to acquire additional franchises within your Territory.
Minimum Performance Standards
The grant of your designated Territory is expressly conditioned upon your successful penetration of the market in the Designated Territory. You must promote actively and aggressively the products and services of your CINCH I.T. Franchised Business within your Designated Territory.
If you do not sell one new managed service provider ("Managed Service Provider" or "MSP") contract for 3 consecutive months, we will require you to undertake and complete a performance improvement plan ("Plan") over a consecutive 3 month period. The Performance Improvement Plan consists of a list of activity metrics assigned by us that must be performed by you each week. You must also attend a weekly accountability telephone conference to review the assigned metrics and your results. You will be charged in one hour increments at our then-current rate for remedial training for each accountability conference. If after completion of the Plan you do not sell one new MSP contract within 3 months, you will be in default of your Franchise Agreement and we may we may terminate the Franchise Agreement.
As fully detailed in our confidential Operations Manual, a Managed Services Contract is a Technology Support Plan that offers Support, Proactive Maintenance, a Cybersecurity Suite of Services and Consultation. The Support Plans are priced per user and have a minimum of 10 users.
Source: Item 12 — TERRITORY (FDD pages 39–43)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, Cinch I.T. may not alter a franchisee's Designated Territory without the franchisee's consent. However, the grant of the Designated Territory is expressly conditioned upon the franchisee's successful penetration of the market within that territory, requiring active and aggressive promotion of Cinch I.T.'s products and services.
Specifically, if a Cinch I.T. franchisee does not sell one new managed service provider (MSP) contract for three consecutive months, Cinch I.T. will require the franchisee to undertake and complete a performance improvement plan (Plan) over a consecutive three-month period. This plan includes activity metrics assigned by Cinch I.T. that the franchisee must perform each week, along with attending a weekly accountability telephone conference to review the assigned metrics and results. The franchisee will be charged for remedial training for each accountability conference in one-hour increments at Cinch I.T.'s then-current rate.
If, after completing the Plan, the Cinch I.T. franchisee still does not sell one new MSP contract within three months, the franchisee will be in default of the Franchise Agreement, and Cinch I.T. may terminate the Franchise Agreement. While this does not explicitly state that Cinch I.T. can alter the territory, failure to meet the performance standards can lead to termination of the agreement, effectively ending the franchisee's rights to the Designated Territory. A Managed Services Contract, as detailed in the Operations Manual, is a Technology Support Plan that offers Support, Proactive Maintenance, a Cybersecurity Suite of Services, and Consultation, priced per user with a minimum of 10 users.
It is important to note that Cinch I.T. franchisees do not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, or other channels of distribution and competitive brands controlled by Cinch I.T. Additionally, under the Multi-Unit Development Agreement, if a franchisee defaults, Cinch I.T. may terminate the Development Agreement and the franchisee's territorial rights in the Development Area.