Under what circumstances can Exit Realty Upper Midwest terminate or modify an Exit franchisee's exclusive rights to a Protected Territory?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement. Your exclusive rights to a Protected Territory may be terminated or modified by EXIT Realty Upper Midwest if you fail to comply with the terms and conditions of the Franchise Agreement. In addition, the exclusive area rights will terminate, and you will be in default under your Franchise Agreement and your Franchise Agreement may be terminated, if you fail to attain and retain the prescribed number of Sales Representatives within the designated period of time. There are no other circumstances that permit EXIT Realty Upper Midwest to modify your territorial rights. The number of Sales Representatives to be maintained is based on the active Realtor® population in the geographic territory that includes the Protected Territory and based upon market conditions and area competition. There is no formula to determine the minimum number of Sales Representatives to be maintained in a Protected Territory. Once the location of the Protected Territory is determined and EXIT Realty Upper Midwest analyzes the active Realtor® population, market conditions and area competition in and around the Protected Territory, the minimum number of Sales Representatives is determined by EXIT Realty Upper Midwest and provided to you not less than 7 calendar days prior to your execution of the Franchise Agreement. See Section 9.8 of the Franchise Agreement. Subject to the foregoing Requirements for minimum number of Sales Representatives are as follows:
| Territory Size | Minimum # of Sales Representatives After 1st Year | Minimum # of Sales Representatives After 2nd Year | Minimum # of Sales Representatives After 3rd Year and Thereafter |
|---|---|---|---|
| Rural Density Territory | 3 | 5 | 7 |
| Low Density Territory | 5 | 7 | 10 |
| Medium | 6 | 12 | 20 |
| Density Territory | |||
| High Density Territory | 10 | 20 | 30 |
Source: Item 12 — TERRITORY (FDD pages 24–25)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Exit Realty Upper Midwest can terminate or modify an Exit franchisee's exclusive rights to a Protected Territory under specific circumstances. The primary reason for termination or modification is failure to comply with the terms and conditions of the Franchise Agreement. Additionally, the exclusive area rights will terminate if the franchisee fails to attain and retain the prescribed number of Sales Representatives within a designated period.
The required number of Sales Representatives is determined by Exit Realty Upper Midwest based on the active Realtor population in the geographic territory, market conditions, and area competition. The FDD does not provide a specific formula for determining the minimum number of Sales Representatives. Instead, Exit Realty Upper Midwest analyzes the relevant factors and provides the minimum number to the franchisee at least 7 calendar days before the Franchise Agreement is executed.
The number of sales representatives required depends on the territory size. For example, in a Rural Density Territory, the franchisee must have a minimum of 3 Sales Representatives after the 1st year, 5 after the 2nd year, and 7 after the 3rd year and thereafter. In a High Density Territory, the franchisee must have a minimum of 10 Sales Representatives after the 1st year, 20 after the 2nd year, and 30 after the 3rd year and thereafter. These requirements highlight the importance of meeting specific performance metrics to maintain the exclusive rights to the Protected Territory.