Are there restrictions on Crawlspace Medic franchisee sales within the Territory?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
Agreement, Franchisor reserves the right to open, operate or franchise Crawlspace Medic franchises around, bordering and adjacent to the Territory. Franchisee will be selling its products and services from a location within the territory, and will provide services to customers within that territory. Franchisee is prohibited from selling and soliciting customers through alternative distribution channels as more fully specified herein.
- 3.2 Reservation of Rights. Franchisee understands and agrees that all rights to any businesses, other than as specified in this Agreement, are fully reserved to Franchisor within or outside of the Territory. By way of example only, Franchisor reserves the rights to offer (i) other products or services not offered under the Marks, (ii) other crawlspace or basement care and repair concepts under the Marks or other trademarks, including licensing Franchisor's designs for use in other formats and (iii) products or services through any channel in the Territory other than a dedicated Crawlspace Medic location, such as the Internet ("Alternate Distribution Channels"). Franchisee will receive no compensation for Franchisor's sales through Alternate Distribution Channels made within the Territory. Franchisor also reserves the right to acquire, be acquired by or merge with another company.
Source: Item 16 — RESTRICTION ON WHAT FRANCHISEE MAY SELL (FDD page 33)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic FDD, franchisees face several restrictions regarding sales within their designated territory. While franchisees are granted the right to operate a Crawlspace Medic outlet within a specific territory, this territory is not exclusive. Crawlspace Medic retains the right to sell products and services under its trademarks within the territory through alternative distribution channels, such as the internet, without compensating the franchisee. Franchisees are also prohibited from selling and soliciting customers through these alternative distribution channels.
Crawlspace Medic also reserves the right to operate or franchise Crawlspace Medic franchises around, bordering, and adjacent to the franchisee's territory. The franchisee is expected to sell products and services from a location within their territory and provide services to customers within that territory. To maintain the territory, the franchisee must meet specific Minimum Performance Requirements for Revenue Per Year of Agreement. Failure to meet these requirements can result in a reduction in the size of the territory or termination of the franchise agreement.
Furthermore, Crawlspace Medic retains the right to purchase, merge, acquire, or affiliate with existing competitive or noncompetitive businesses, even those located within the franchisee's territory. While Crawlspace Medic states it will not convert any acquired facilities operating within the territory to a Crawlspace Medic franchise during the term of the agreement, this still allows for potential competition from other businesses acquired by the franchisor. These factors highlight the importance of understanding the competitive landscape and the franchisor's rights within the territory before investing in a Crawlspace Medic franchise.