Who determines the specific geographical area of the 'Territory' for an Extreme Art Studio?

According to Extreme Art Studio's 2024 Franchise Disclosure Document, Extreme Art Studio specifies the geographical area that constitutes the Territory for a franchise. The document states that the Territory will be the specific geographical area that Extreme Art Studio specifies for the Extreme Art Studio Business. This area may be defined using contiguous zip codes, street boundaries, or county boundaries, or it may be depicted on a map included as Attachment B-1 or in an Extreme Art Rider.

However, the FDD also indicates that the franchisee and Extreme Art Studio must mutually agree upon a Territory that conforms to the territory guidelines outlined in Item 12 of the Franchise Disclosure Document. Once this agreement is reached, Extreme Art Studio will complete Attachment E-1 to formally define the Territory. This suggests that while Extreme Art Studio sets the initial guidelines and has the final say, there is room for discussion and agreement with the franchisee regarding the specific geographical area.

It is important to note that Extreme Art Studio retains significant rights outside the defined Territory. These rights include the ability to establish other Extreme Art Studio businesses or similar businesses under different trade names, sell products and services through alternative channels of distribution (such as online or wholesale), and offer or license the various modules described in the Franchise Agreement. This means that while a franchisee is protected within their Territory, Extreme Art Studio can still operate and expand its brand through other avenues, potentially impacting the franchisee's business.

Prospective franchisees should carefully review Item 12 of the Franchise Disclosure Document, as referenced in the agreement, to fully understand the territory guidelines and how they may impact their business. They should also discuss the Territory boundaries and potential for encroachment with Extreme Art Studio during the due diligence process to ensure they are comfortable with the level of protection offered.