What is the geographic scope of the protected territory granted to a Crown Gold Exchange franchisee?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
evelop, open and operate a Crown Gold Exchange business at the Location for the entire term of this Agreement.
- 2.2 Protected Territory. Crown Gold Franchising shall not establish, nor license the establishment of, another business within the Territory selling the same or similar goods or services under the same or similar trademarks or service marks as a Crown Gold Exchange business. Crown Gold Franchising retains the right to:
- (i) establish and license others to establish and operate Crown Gold Exchange businesses outside the Territory, notwithstanding their proximity to the Territory or their impact on the Business;
- (ii) operate and license others to operate businesses anywhere that do not operate under the Crown Gold Exchange brand name; and
- (iii) sell and license othersto sell products and services in the Territory through channels of distribution (including the internet) other than Crown Gold Exchange outlets.
- 2.3 Franchisee Control. Franchisee represents that it will identify each owner, officer and director of Franchisee, and describes the nature and extent of each owner's interest in Franchisee. If any of this information changes, Franchisee shall notify Franchisor within 10 days.
- 2.4 Principal Executive. Franchisee agrees that the person designated as the "Principal Executive" on the Summary Page is the executive primarily responsible for the Business and has decision-making authority on behalf of Franchisee. The Principal Executive must have at least 10% ownership interest in Franchisee. The Principal Executive does not have to serve as a day-today general manager of the Business, but the Principal Executive must devote substantial time and attention to the Business.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, the geographic scope of the protected territory granted to a franchisee is determined by Crown Gold Franchising and stated on the Location Acceptance Letter. Crown Gold Franchising agrees not to establish or license another business selling similar goods or services under the Crown Gold Exchange brand within the franchisee's territory. However, Crown Gold Franchising retains the right to establish or license other Crown Gold Exchange businesses outside the Territory, even if they are in close proximity or impact the franchisee's business. They also retain the right to operate or license businesses that do not operate under the Crown Gold Exchange brand name anywhere. Additionally, Crown Gold Franchising can sell and license others to sell products and services within the franchisee's territory through other distribution channels, including the internet, that are not Crown Gold Exchange outlets.
If the Territory is not defined in writing within 60 days after the franchisee opens their business, the territory will default to the zip code of the franchised business location and the surrounding zip codes, encompassing a total population of 50,000. This default definition provides a minimum guaranteed territory size if Crown Gold Franchising fails to specify it promptly.
This means that while franchisees are granted a protected territory, Crown Gold Exchange retains significant rights to operate and license businesses that may compete with the franchisee, especially through alternative channels and different brands. Prospective franchisees should carefully consider these limitations on their protected territory and how they might impact their business. It is important to discuss territory specifics with Crown Gold Exchange prior to signing the agreement.