Does Desi District grant an exclusive territory in the franchise agreement?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
tional franchises.
Territory Protection
In your franchise agreement, we grant you an exclusive territory. In your territory, we will not establish either a company-owned or franchised outlet selling the same or similar goods or services under the same or similar trademarks or service marks as a Desi District outlet. The continuation of your territorial protection does not depend on achieving a certain sales volume, market penetration, or other contingency. There are no circumstances that permit us to modify your territorial rights.
If you sign a MUDA, you do not receive an exclusive territory as an area developer. Therefore, with respect to a MUDA, we make the following disclosure: You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Restrictions on Us from Soliciting or Accepting Orders in Your Territory
There are no restrictions on us from soliciting or accepting orders from consumers inside your territory. We reserve the right to use other channels of distribution, such as the internet, catalog sales, telemarketing, or other direct marketing sales, to make sales within your territory
using our principal trademarks or using trademarks different from the ones you will use under your franchise agreement. We do not pay any compensation to you for soliciting or accepting orders from inside your territory.
Soliciting by You Outside Your Territory
There are no restrictions on you from soliciting or accepting orders from consumers outside of your territory, except that all marketing and advertising is subject to our approval.
Source: Item 12 — TERRITORY (FDD pages 38–40)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the franchise agreement grants franchisees an exclusive territory, meaning Desi District will not establish another company-owned or franchised outlet selling similar goods or services under the same trademarks within the franchisee's territory. The continuation of this territorial protection is not dependent on achieving specific sales volumes or market penetration. However, this exclusive territory is not granted if the franchisee signs a Multi-Unit Development Agreement (MUDA) as an area developer.
The territory size is determined by Desi District and typically includes a population of approximately 50,000 people within a 5-mile radius for an Eatery and approximately 100,000 people within a 10-mile radius for a Grocery Market. The territory is usually specified as a radius around the franchisee's location, but Desi District may use other boundaries such as county lines, political boundaries, streets, geographical features, or trade areas.
Desi District retains the right to solicit and accept orders from consumers inside the franchisee's territory through other channels of distribution, such as the internet, catalog sales, telemarketing, or other direct marketing sales, without providing any compensation to the franchisee. Franchisees are also permitted to solicit and accept orders from consumers outside their territory, subject to Desi District's approval of all marketing and advertising materials. Desi District and its affiliates do not currently operate or franchise businesses under different trademarks selling similar goods or services, but the franchise agreement does not explicitly prohibit them from doing so in the future.
Prospective franchisees should be aware that while they receive an exclusive territory under a standard franchise agreement, this protection does not extend to online sales or other distribution channels managed by Desi District. Additionally, the absence of a prohibition against Desi District operating similar businesses under different trademarks represents a potential risk. Franchisees should seek clarification on these points and carefully consider the implications for their business.