What rights does an Exit franchisee have within their Protected Territory?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
f the date of this Agreement 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").
**2.4.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a franchisee is granted the right to use Exit's service mark and other proprietary marks to operate a real estate brokerage office within a specific geographic area, known as the "Protected Territory." This right is granted during the term of the agreement and is subject to the terms and conditions outlined in the agreement, as well as the guidelines established by Exit. To maintain this right, the franchisee must obtain and maintain a valid real estate broker's license in the state where the Protected Territory is located, avoid defaulting on the agreement, and ensure the agreement is not terminated, canceled, or abandoned. The specific geographic area of the Protected Territory is detailed in Schedule 3 of the Franchise Agreement.
Exit ensures exclusivity within the Protected Territory by agreeing that, as long as the franchisee is not in breach of the agreement, neither Exit nor its subfranchisor will establish another real estate service franchise or Exit-owned real estate service office within the Protected Territory using the proprietary marks. However, this exclusivity is contingent upon the franchisee complying with all terms of the agreement, particularly those related to maintaining a specified minimum number of affiliated associate brokers and sales representatives who possess valid real estate licenses for the state where the Protected Territory is located.
Despite the exclusivity within the Protected Territory, Exit franchisees are not prohibited from listing and selling property or representing clients outside of their Protected Territory. Subject to any restrictions imposed by state licensing authorities, franchisees are free to deal with property and/or represent clients at any location within the state. Similarly, other Exit franchisees may list and sell property or represent clients domiciled in the Protected Territory. This means that while Exit aims to provide a protected area for its franchisees, it also allows for flexibility in conducting business beyond those boundaries, and does not prevent other franchisees from serving clients within a specific territory.
It is important to note that if the franchisee defaults on the agreement and fails to cure the default in a timely manner, the agreement automatically becomes nonexclusive. In such cases, the subfranchisor has the right to own, operate, or sell franchises within the Protected Territory, in addition to any other rights and remedies available under the agreement. This highlights the importance of adhering to the terms of the franchise agreement to maintain the exclusive rights within the Protected Territory.