Under what circumstances can Extreme Art Studio modify a franchisee's rights in their Territory?
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);
Source: Item 12 — TERRITORY (FDD pages 37–39)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, a franchisee's rights in their territory are generally protected during the term of the Franchise Agreement. Specifically, Extreme Art Studio states that the franchisee's rights in the Territory and the continuation of their Franchise do not depend on achieving certain sales volumes, market penetration, or other contingencies. The FDD explicitly states that there are no circumstances that permit Extreme Art Studio to modify a franchisee's rights in the Territory during the term of the Franchise Agreement. Once Extreme Art Studio establishes a franchisee's Territory, they will not change or modify it without the franchisee's consent. The Territory is defined by an approximate four-mile radius surrounding the specific site location of the Extreme Art Studio Business.
However, Extreme Art Studio retains several rights that could impact a franchisee's business within or outside their territory. These include the right to establish and operate other Extreme Art Businesses or similar art studio businesses outside the franchisee's Territory, the right to operate similar businesses under different trade names, and the right to sell products or services through alternative channels of distribution, such as online or wholesale. Extreme Art Studio also reserves the right to develop or acquire other concepts or businesses that offer similar products and services, even within a franchisee's Territory. Additionally, Extreme Art Studio can offer products and services at special events or temporary venues, even within a franchisee's Territory.
Prospective franchisees should be aware that while their core territory is protected from other Extreme Art Studio franchises, they do not receive an exclusive territory and may face competition from other Extreme Art Studio Businesses located outside the Territory or from other channels of distribution or competitive brands that Extreme Art Studio or its affiliates control. Furthermore, Extreme Art Studio is not required to compensate franchisees if they exercise any of their retained rights inside or outside the franchisee's Territory, including soliciting or accepting orders. These retained rights and competitive factors could significantly affect a franchisee's potential revenue and market share.