What territory rights does Extreme Art Studio retain?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
We are not required to pay you if we exercise any of the rights specified above inside or outside your Territory including for our soliciting or accepting orders. We do not pay compensation for soliciting or accepting orders inside your Territory.
Source: Item 12 — TERRITORY (FDD pages 37–39)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, the franchisor retains significant territory rights even after awarding a franchise to a new franchisee. These retained rights allow Extreme Art Studio and its affiliates to operate and franchise other businesses, including those similar to an Extreme Art Studio Business, under different brand names and through various channels of distribution, both inside and outside a franchisee's territory. This means that while a franchisee is granted a territory, Extreme Art Studio can still compete in that same area through other avenues.
Specifically, Extreme Art Studio retains the right to establish other Extreme Art Businesses or art studio businesses outside the franchisee's territory, operate similar businesses under different names anywhere, and sell products/services through alternative channels like the internet or wholesale, even within the franchisee's territory. They can also develop or acquire businesses that offer similar products/services and offer Extreme Art Studio products/services at special events, conferences, or temporary venues, regardless of location. Furthermore, Extreme Art Studio can advertise and sell to customers outside the franchisee's territory, including through the System Website, and allow other franchisees to do the same.
Extreme Art Studio also retains the right for its affiliates to sell Kidcreate Studio businesses, even within a franchisee's territory, which may offer identical curriculum. The Franchise Agreement does not require Extreme Art Studio to compensate franchisees when exercising these retained rights, even if it involves soliciting or accepting orders within the franchisee's territory. These retained rights highlight that an Extreme Art Studio franchisee will not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, or other distribution channels controlled by Extreme Art Studio.
Prospective franchisees should be aware that these retained rights could significantly impact their business. The ability of Extreme Art Studio to operate similar businesses under different brand names or sell through alternative channels within or near a franchisee's territory could lead to direct competition and reduced sales. The lack of compensation for orders solicited or accepted within a franchisee's territory by Extreme Art Studio or other franchisees further emphasizes the non-exclusive nature of the territory and the potential for internal competition.