What is the definition of 'Protected Territory' for an Exit franchise, as defined in the agreement?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
ent and agrees to immediately notify Subfranchisor of any changes in the information through the term of this Agreement.
2. GRANT OF FRANCHISE
2.1. Grant of Franchise.
Subfranchisor grants to Franchisee, and Franchisee accepts, the right to use the federally registered service mark "EXIT" and such other Proprietary Marks (as defined in Section 43 of this Agreement) as Subfranchisor may designate from time to time for the purpose of operating a real estate brokerage/real estate service office within the specific geographic area (the "Protected Territory") outlined in the Description of Protected Territory (Schedule 3 of this Agreement) during the term of this Agreement, upon the terms and conditions of this Agreement and in accordance with guidelines established by Subfranchisor and EXIT (the "Franchise"). This grant is conditioned upon (i) Franchisee obtaining and maintaining a valid real estate broker's license in the state containing the Protected Territory to enable Franchisee to perform the full range of real estate services to be provided under the System, (ii) Franchisee not defaulting under this Agreement, and (iii) this Agreement not being terminated, canceled or abandoned.
2.2. Exclusivity
- (A) So long as Franchisee is not in breach of this Agreement, neither Subfranchisor nor EXIT shall establish another real estate service Franchise or EXIT owned real estate service office within the Protected Territory using the Proprietary Marks.
- (B) In the Event of Default (which is not timely cured), then this Agreement shall automatically become nonexclusive and Subfranchisor, in addition to all of its other rights and remedies set forth in this Agreement, will have the right to own, operate, or sell franchises within the Protected Territory.
2.3. Conditions to Exclusivity
- (A) Franchisee is not prohibited from listing and selling property or representing clients outside the Protected Territory. Subject to any restrictions or limitations placed upon it by State licensing authorities, Franchisee is free to deal with property and/or representation of clients at any location within the state. Likewise, other EXIT franchisees may list and sell property or represent clients domiciled in the Protected Territory.
- (B) In order to maintain the protected status of the Protected Territory, Franchisee must comply with all of the terms of this Agreement and, in particular, must comply with the provisions of this Agreement regarding maintenance of a specified minimum number of affiliated associate brokers and sales representatives, all of whom must at all times possess either a valid real estate broker's or sales representative's license for the state where the Protected Territory is located (collectively "Sales Representatives" or "Associate Brokers")
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Protected Territory is a specific geographic area outlined in Schedule 3 of the Franchise Agreement. Exit grants the franchisee the right to operate a real estate brokerage office within this territory, using Exit's service marks.
The franchisee's exclusivity within the Protected Territory is conditional. As long as the franchisee is not in breach of the agreement, Exit will not establish another real estate service franchise or an Exit-owned real estate service office within the Protected Territory using their proprietary marks. However, this exclusivity becomes non-exclusive if the franchisee defaults on the agreement and fails to correct the default in a timely manner. In such cases, Exit reserves the right to operate or sell franchises within the Protected Territory.
Even with a Protected Territory, Exit franchisees are not restricted from listing or selling properties or representing clients outside of their designated area, provided they comply with state licensing regulations. Similarly, other Exit franchisees can list and sell property or represent clients within the franchisee's Protected Territory. To maintain the protected status, the franchisee must adhere to all terms of the agreement, particularly those concerning maintaining a minimum number of affiliated associate brokers and sales representatives who hold valid real estate licenses for the state where the territory is located.