What is the consequence if an Exit franchisee fails to maintain the minimum number of Sales Representatives?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement. Your exclusive rights to a Protected Territory may be terminated or modified by EXIT Realty Upper Midwest if you fail to comply with the terms and conditions of the Franchise Agreement. In addition, the exclusive area rights will terminate, and you will be in default under your Franchise Agreement and your Franchise Agreement may be terminated, if you fail to attain and retain the prescribed number of Sales Representatives within the designated period of time. There are no other circumstances that permit EXIT Realty Upper Midwest to modify your territorial rights. The number of Sales Representatives to be maintained is based on the active Realtor® population in the geographic territory that includes the Protected Territory and based upon market conditions and area competition. There is no formula to determine the minimum number of Sales Representatives to be maintained in a Protected Territory. Once the location of the Protected Territory is determined and EXIT Realty Upper Midwest analyzes the active Realtor® population, market conditions and area competition in and around the Protected Territory, the minimum number of Sales Representatives is determined by EXIT Realty Upper Midwest and provided to you not less than 7 calendar days prior to your execution of the Franchise Agreement. See Section 9.8 of the Franchise Agreement. Subject to the foregoing Requirements for minimum number of Sales Representatives are as follows:
| Territory Size | Minimum # of Sales Representatives After 1st Year | Minimum # of Sales Representatives After 2nd Year | Minimum # of Sales Representatives After 3rd Year and Thereafter |
|---|---|---|---|
| Rural Density Territory | 3 | 5 | 7 |
| Low Density Territory | 5 | 7 | 10 |
| Medium | 6 | 12 | 20 |
| Density Territory | |||
| High Density Territory | 10 | 20 | 30 |
Source: Item 12 — TERRITORY (FDD pages 24–25)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, if a franchisee fails to attain and retain the prescribed number of Sales Representatives within the designated period, they will be in default under their Franchise Agreement. This default can lead to the termination of the Franchise Agreement, and the franchisee's exclusive area rights will also terminate.
The minimum number of Sales Representatives an Exit franchisee must maintain depends on the active Realtor population in the geographic territory, market conditions, and area competition. Exit Realty Upper Midwest determines this number after analyzing these factors for the Protected Territory. The franchisee will receive this information at least 7 calendar days before signing the Franchise Agreement.
The specific minimum number of sales representatives varies depending on the territory size. For a Rural Density Territory, the minimum number of sales representatives is 3 after the 1st year, 5 after the 2nd year, and 7 after the 3rd year and thereafter. For a Low Density Territory, the minimum number is 5 after the 1st year, 7 after the 2nd year, and 10 after the 3rd year and thereafter. For a Medium Density Territory, the minimum number is 6 after the 1st year, 12 after the 2nd year, and 20 after the 3rd year and thereafter. For a High Density Territory, the minimum number is 10 after the 1st year, 20 after the 2nd year, and 30 after the 3rd year and thereafter.
This requirement highlights the importance of actively recruiting and retaining sales representatives to maintain compliance with the Franchise Agreement and avoid potential termination of the agreement and loss of exclusive territory rights. Prospective franchisees should carefully consider their ability to meet these minimum requirements based on their local market conditions and competition.