Can Extreme Art Studio modify the rights in the Territory during the term of the Franchise Agreement?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
Your rights in the Territory and the continuation of your Franchise do not depend on your achieving a certain sales volume, market penetration, or other contingency, and there are no other circumstances that permit us to modify your rights in the Territory during the term of the Franchise Agreement.
We and our affiliates retain all territory rights not expressly granted to you. These rights include:
(1) the right to establish and operate, and allow others to establish and operate, other Extreme Art Businesses and other art studio businesses using the Marks and the System, holding classes or activities at any location outside the Territory of your Extreme Art Studio Businesses and on such terms and conditions we deem appropriate;
(2) the right to establish and operate businesses similar to your Extreme Art Studio Business anywhere under other trade names, trademarks, service marks and commercial symbols different from the Marks;
(3) the right to use the Marks and the System to sell any products or services the same as or similar to those that you will sell through any alternative channels of distribution within or outside of the Territory including retail locations and other channels of distribution such as television, mail order, catalog sales, wholesale to unrelated retail outlets, or over the Internet;
(4) the right to develop or acquire, or be acquired by (whether through acquisition of assets, ownership interests, or otherwise, regardless of the form of transaction), one or more additional concepts or businesses: (i) providing products and services similar to those provided at Extreme Art Studio Businesses; and/or (ii) creating or maintaining franchises, licenses, or similar arrangements with respect to these businesses, wherever these businesses (or the franchise owners or licensees of these businesses) are located or operating (including in the Territory of any of your Extreme Art Studio Businesses);
(5) the right to offer products and services offered by Extreme Art Studio Businesses under the Marks or any other trade names, trademarks, service marks, or commercial symbols that are the same as or different from Extreme Art Studio Businesses, at any special event, conference, exhibition, or temporary venue (including in the Territory of any of your Extreme Businesses);
(6) the right to advertise, solicit, accept orders and offer and sell products and services to customers located outside the Territory of your Extreme Art Studio Businesses, including via the System Website, and the right to allow other Extreme Art Studio Businesses to do the same;
(7) the right to engage in all other activities not expressly prohibited by the Franchise Agreement.
We have no present plans to establish other related franchises or companyowned businesses offering similar products or services under a name or trademark that is different from Extreme Art, although we reserve the right to do so; and
- (8) the right for our affiliate to sell Kidcreate Studio businesses in the Territory included those that offer the Modules that your Extreme Art Business may offer.
Source: Item 12 — TERRITORY (FDD pages 37–39)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, a franchisee's rights in their territory do not depend on achieving specific sales volumes, market penetration, or other performance-based contingencies. Extreme Art Studio states that there are no circumstances that would allow them to modify a franchisee's territorial rights during the term of the Franchise Agreement. Once the territory is established, which is typically an approximate four-mile radius around the studio's location, Extreme Art Studio will not change or modify it without the franchisee's consent.
However, Extreme Art Studio retains several rights within and outside the franchisee's territory. These include the right to establish and operate other Extreme Art Studio businesses or similar art studio businesses outside the franchisee's territory, even using the same marks and system. They also reserve the right to operate similar businesses under different trade names and trademarks anywhere, and to sell products and services through alternative channels of distribution, such as online or wholesale, both within and outside the territory.
Furthermore, Extreme Art Studio can develop or acquire other concepts or businesses that offer similar products and services, and they can offer Extreme Art Studio products and services at special events or temporary venues, even within a franchisee's territory. They can also advertise and sell to customers located outside the franchisee's territory, including through the System Website, and allow other franchisees to do the same. These retained rights mean that while the physical territory is protected from additional franchised locations, Extreme Art Studio can still engage in activities that may compete with the franchisee's business through other channels and brands.