Under what condition can Exit Realty Upper Midwest establish a company-owned or franchised outlet in my Exit Protected Territory?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchise Agreement provides that EXIT Realty Upper Midwest may not establish either a company-owned or franchised outlet, in the Protected Territory, selling the same goods or similar goods or services under the same or similar trademarks or service marks during the term of the Franchise Agreement, unless you are in default under the terms of the Franchise
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 is generally restricted from establishing a company-owned or franchised outlet within a franchisee's protected territory that offers similar goods or services under the same trademarks during the term of the Franchise Agreement. However, this restriction is lifted if the franchisee is in default under the terms of the Franchise Agreement.
Furthermore, a franchisee's exclusive rights to their protected territory can be terminated or modified if they fail to comply with the terms and conditions of the Franchise Agreement. Specifically, the exclusive area rights will terminate, and the franchisee will be in default, if they fail 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, market conditions, and area competition in and around the protected territory. This number is provided to the franchisee no less than 7 calendar days before they sign the Franchise Agreement.
The minimum number of sales representatives a franchisee must maintain varies depending on the territory density. For a Rural Density Territory, the minimum number of sales representatives is 3 after the 1st year, 5 after the 2nd year, and 7 after the 3rd year and thereafter. For a Low Density Territory, the minimums are 5, 7, and 10, respectively. For a Medium Density Territory, the minimums are 6, 12, and 20, respectively. Finally, for a High Density Territory, the minimums are 10, 20, and 30, respectively. Therefore, maintaining the required number of sales representatives is crucial for retaining territorial exclusivity.