Does Ella Cafe grant franchisees an exclusive territory?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
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ITEM 12 TERRITORY
You will not receive an exclusive territory. You may face competition from other franchisees, from Coffee Houses that we own, or from other channels of distribution or competitive brands that we control.
Your Location
You must only operate the Coffee House from a location that you select and that we approve. If the specific location is not known at the time you sign a franchise agreement, then your location is subject to our approval after you sign the franchise agreement. You must select a site from within the non-exclusive Site Selection Area as identified in the Franchise Agreement; however, we may use other boundaries (such as counties or other political boundaries, streets, geographical features, or trade area). The exact Site Selection Area granted to you will be specified in your Franchise Agreement. Site Selection Area does not grant you any territorial protection of your Franchised Business.
Grant of Territory
Once the location of the Coffee House is identified, we will grant to you a territory in which you will operate your Franchised Business which will serve as the "Designated Area." If you and your affiliates are in compliance with the Franchise Agreement and any other agreement you have with us or our affiliates, except as described below, we and our affiliates will not establish or authorize anyone except you to establish an ELLA Coffee House within the Designated Area specified in the Franchise Agreement. Generally, the Designated Area will be a geographic area which is a circle having the Coffee House's front entrance as its center and a radius of 1 mile, but the Designated Area may be less. In densely populated urban areas, the Designated Area will be less and may be as small as an office or retail building in these types of areas. Your exact Designated Area will be identified in the franchise agreement. If you are granted the right to operate an ELLA Coffee House in a Reserved Area, no Designated Area will be granted for that Coffee House. You are not restricted from soliciting or accepting orders from consumers outside of your Designated Area with our prior written consent, except with respect to Reserved Areas and the channels of distribution described below, or if we limit the area in which you can provide catering services.
Franchisor's Reserved Rights
"Reserved Area" means the enclosed area of retail sales establishments, including without limitation, shopping malls, grocery stores, and retailers that are part of regional or national chains; food courts; airports; hospitals; cafeterias; commissaries; campuses of schools, colleges, and universities; hotels; office buildings; stadiums; arenas; ballparks; festivals; fairs; military bases; public transportation facilities, government facilities, and other mass gathering locations or events.
We retain all other rights in and outside the Designated Area.
Source: Item 12 — TERRITORY (FDD pages 33–35)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, franchisees do not receive an exclusive territory. This means that a franchisee may face competition from other Ella Cafe franchisees, coffee houses owned by Ella Cafe, or other distribution channels and competitive brands that Ella Cafe controls.
However, once a location is approved, Ella Cafe will grant a "Designated Area" to the franchisee. Generally, this Designated Area will be a circle with a 1-mile radius from the Coffee House's front entrance, although it may be smaller in densely populated urban areas. Ella Cafe and its affiliates will not establish or authorize anyone else to establish an Ella Cafe within the Designated Area, provided the franchisee is in compliance with all agreements.
Ella Cafe retains rights both inside and outside the Designated Area. They can operate or license others to operate Ella Cafe at any location outside the Designated Area and in any Reserved Area, such as shopping malls, airports, hospitals, and college campuses, even if these Reserved Areas are adjacent to or surrounded by the Designated Area. Ella Cafe can also operate other coffee houses or food service businesses under different trademarks inside and outside the Designated Area. They can also engage in the production, distribution, and sale of food, beverages, or other services and products through any method of distribution other than an Ella Cafe, such as vending machines, food trucks, grocery stores, and the Internet, without compensating the franchisee.
While franchisees are generally allowed to solicit and accept orders from consumers outside their Designated Area with prior written consent, this is not permitted with respect to Reserved Areas or alternate channels of distribution, and Ella Cafe may limit the area in which franchisees can provide catering services. Ella Cafe also reserves the right to establish National Accounts in any area, including the Designated Area, and franchisees may be required to service these accounts under the negotiated terms. If a franchisee is deemed incapable of servicing a National Account, Ella Cafe may authorize other franchisees or third parties to provide the services.