Is Face Foundrie obligated to compensate a franchisee for soliciting customers from the franchisee's territory?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
As a result of our reserved rights described in this Item 12, you will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we or our affiliates own, or from other channels of distribution or competitive brands that we or our affiliates control. You have no options, rights of first refusal or similar rights to acquire additional franchises or establish additional Facial Bars. We are not obligated to pay compensation to you for soliciting customers from your franchise territory. We have not established any minimum sales quota and do not require any certain level of sales, revenue volume or market penetration in order for you to maintain your Territory. We will not reduce the size of your Territory even if the population in it increases. Likewise, we will not expand the size of your Territory if the population in it decreases. We cannot alter your Territory unless you give us your written consent. Without our prior written consent, you may not conduct sales activities outside your Territory. You may not conduct any Facial Bar activities outside of the premises of your Facial Bar unless we have approved such activities in writing, and you may not use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing, to make sales outside of your Territory.
Source: Item 12 — TERRITORY (FDD pages 43–46)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, franchisees will not receive an exclusive territory and Face Foundrie is not obligated to compensate a franchisee for soliciting customers from their territory. This means that a Face Foundrie franchisee may face competition from other franchisees, outlets owned by Face Foundrie or its affiliates, or other distribution channels or competitive brands controlled by Face Foundrie or its affiliates.
This lack of an exclusive territory and the absence of compensation for customer solicitation could significantly impact a franchisee's revenue potential. The franchisee will need to compete actively to attract and retain customers, even within their designated territory. This could involve increased marketing expenses and a greater emphasis on customer service to differentiate their Facial Bar from competitors, including other Face Foundrie locations.
Face Foundrie also retains the right to operate businesses using its trademarks to distribute products or offer services through various channels, including the internet, mail order, and catalogs, both within and outside a franchisee's territory. Additionally, Face Foundrie has the exclusive right to sell products identified with its marks through any distribution channel, except through the operation of a Facial Bar. This broad reservation of rights by Face Foundrie could further intensify competition for franchisees and limit their ability to capture market share within their territory.
A prospective franchisee should carefully consider these factors and evaluate the potential impact on their business before investing in a Face Foundrie franchise. Understanding the competitive landscape and developing a robust marketing and customer retention strategy will be crucial for success.