Under what condition can a Fitstop franchisee actively solicit customers outside of their designated territory?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
You may not use alternative channels of distribution, such as the internet, catalog sales, telemarketing or other direct marketing, to make any sales outside of your Designated Territory (including the sale of any Approved Products). You are also prohibited from actively soliciting customers outside of your Designated Territory without our prior written consent. We are not required to pay you any compensation for soliciting or accepting orders inside your Designated Territory. Your Franchise Agreement does not provide you with any right of first refusal, option or any other rights to acquire additional franchises.
Reserved Rights
Source: Item 12 — TERRITORY (FDD pages 35–37)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee is generally prohibited from actively soliciting customers outside of their designated territory without prior written consent from Fitstop. This restriction is in place to protect the territorial rights granted to other franchisees and to maintain a consistent brand image.
However, the FDD clarifies that there are no territorial restrictions on accepting and providing approved services to customers who reside, work, or are otherwise based outside of a franchisee's designated territory, provided that these services are performed at the franchisee's approved premises. This means a Fitstop franchisee can serve customers from outside their territory as long as they come to the franchisee's physical location. All revenue must be generated at and from the approved premises.
This policy creates a balance between protecting franchisees' territories and allowing them to serve a broader customer base. While franchisees cannot actively target customers outside their territory without Fitstop's permission, they are not restricted from serving those customers if they seek out the Fitstop location themselves. This is a common practice in franchising, as it allows franchisees to benefit from the overall brand recognition and marketing efforts of the franchise system while still maintaining some level of territorial protection.
It's important to note that Fitstop reserves the right to market and sell products and services similar to those offered by franchisees under different trademarks, both within and outside the designated territory. They can also distribute approved products and services through alternative channels, such as the internet, without compensating the franchisee. This highlights the importance of understanding the scope of the territorial rights granted and the potential for competition from Fitstop itself.