What rights has the Subfranchisor been granted by Exit regarding franchises and proprietary marks?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
It is understood that Subfranchisor has been granted a license by EXIT to grant franchises and enforce EXIT's rights in the Proprietary Marks in a specified territory which includes the Protected Territory.
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.
- (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.
Upon an Event of Default (unless cured in a timely manner), expiration or termination of this Agreement for whatever reason, Subfranchisor shall have the right to immediately establish, operate or franchise an EXIT franchise anywhere within the Protected Territory.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Subfranchisor has been granted specific rights by Exit to grant franchises and enforce Exit's rights in the proprietary marks within a specified territory. The subfranchisor grants the franchisee the right to use the federally registered service mark "EXIT" and other proprietary marks designated for operating a real estate brokerage office within a defined geographic area, known as the Protected Territory. This right is granted according to the terms and conditions outlined in the agreement and in accordance with guidelines established by both the subfranchisor and Exit.
This grant of franchise is conditional upon the franchisee maintaining a valid real estate broker's license in the state where the Protected Territory is located, ensuring they can provide the full range of real estate services under the Exit system. 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 can establish another real estate service franchise or an Exit-owned real estate service office within the Protected Territory using the proprietary marks.
However, if the franchisee defaults and fails to cure the default in a timely manner, 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 any other rights and remedies available under the agreement. Upon an event of default, expiration, or termination of the agreement, the subfranchisor has the right to immediately establish, operate, or franchise an Exit franchise anywhere within the Protected Territory.