What rights does the 'Franchise Agreement' grant to an Exit franchisee?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
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
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Franchise Agreement grants the franchisee the right to use and be a part of the Exit System. Specifically, the subfranchisor grants the franchisee the right to use Exit's federally registered service mark and other proprietary marks to operate a real estate brokerage/real estate service office within a specific geographic area, known as the "Protected Territory," during the term of the agreement. This right is not exclusive, meaning Exit can grant similar rights to others.
This grant of franchise is conditional. The franchisee must obtain and maintain a valid real estate broker's license in the state containing the Protected Territory to perform the full range of real estate services. The franchisee must also not be in default under the agreement, and the agreement must not be terminated, canceled, or abandoned. So long as the franchisee is not in breach of the agreement, neither the subfranchisor nor Exit will establish another real estate service franchise or Exit-owned real estate service office within the Protected Territory using the Proprietary Marks.
However, in the event of default that is not timely cured, the agreement automatically becomes nonexclusive. In such a case, the subfranchisor has the right to own, operate, or sell franchises within the Protected Territory, in addition to other rights and remedies. The rights and duties within the Franchise Agreement are personal to the franchisee. The franchisee cannot transfer any interest in the franchise without prior written consent of the subfranchisor.