Within what radius of the Exit Franchisee's office is the franchisee prohibited from engaging in a real estate brokerage business that utilizes a reward system for sponsoring sales representatives after termination?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) within a ten (10) mile radius of Franchisee's office, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or entity engaged in any real estate brokerage business, which business utilizes at any location a reward system for "sponsoring" sales representatives at any of its locations, or in any other way operates substantially similar manner to the EXIT System; or
- (b) within a ten (10) mile radius of Franchise's office own, operate, lease, franchise, conduct or engage in, be connected with, have any interest in or assist any person or entity engaged in any real estate brokerage business, provided the foregoing shall not apply if this Agreement expired at the end of its term.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a franchisee is restricted from engaging in a real estate brokerage business that uses a reward system for sponsoring sales representatives within a specific radius of their Exit office after the franchise agreement terminates. Specifically, the franchisee cannot own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in, or assist any person or entity engaged in any real estate brokerage business that utilizes a reward system for "sponsoring" sales representatives or operates in a substantially similar manner to the Exit system. This restriction applies within a ten (10) mile radius of the franchisee's Exit office.
This restriction is designed to protect Exit's business model and network by preventing former franchisees from directly competing with the Exit system using similar methods, particularly those related to incentivizing the recruitment of sales representatives. The ten-mile radius serves as a defined geographical boundary within which Exit seeks to maintain its competitive advantage and brand integrity.
However, this restriction does not apply if the franchise agreement expires at the end of its term. This means that if the franchisee fulfills the entire term of the agreement and it simply concludes without renewal or termination for cause, the franchisee is not bound by the ten-mile radius restriction. This distinction provides some flexibility for franchisees who complete their contractual obligations without incident.
Prospective franchisees should carefully consider the implications of this post-termination restriction, especially if they plan to continue operating a real estate brokerage business after their Exit franchise agreement ends. Understanding the conditions under which the restriction applies and the geographical scope of the restriction is crucial for making informed business decisions.