What is the role of the Franchisee in defining the Exit protected territory?
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.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Franchisee and Subfranchisor define the Exit protected territory. The Subfranchisor grants the Franchisee the right to operate a real estate brokerage office within a specific geographic area, known as the "Protected Territory." This territory is outlined in Schedule 3 of the Franchise Agreement, titled "Description of Protected Territory."
Exit ensures exclusivity within the Protected Territory, meaning that as long as the Franchisee is not in breach of the Franchise Agreement, neither the Subfranchisor nor Exit will establish another real estate service franchise or an Exit-owned real estate service office within that territory using Exit's Proprietary Marks. However, this exclusivity is conditional. If the Franchisee defaults on the agreement and fails to correct it, the agreement automatically becomes non-exclusive. In such cases, the Subfranchisor reserves the right to operate or sell franchises within the previously Protected Territory.
To maintain the protected status of their territory, the Exit Franchisee must adhere to all terms of the Franchise Agreement. A key condition is maintaining a specified minimum number of affiliated associate brokers and sales representatives, all of whom must possess valid real estate licenses for the state where the Protected Territory is located. While the Franchisee is not restricted from listing or selling properties or representing clients outside their Protected Territory, other Exit franchisees also have the liberty to list and sell properties or represent clients within the Franchisee's Protected Territory.