What is the meaning of 'Territory' in the Fly To Fit franchise agreement?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
"Territory" means the territory stated on the Summary Page. If no territory is stated on the Summary Page, then the Territory is determined in accordance with Section 6.1.
ARTICLE 2. GRANT OF LICENSE
- 2.2 Protected Territory. Fly To Fit Franchise shall not establish, nor license the establishment of, another business within the Territory selling the same or similar goods or services under the same or similar trademarks or service marks as a Fly To Fit business. Fly To Fit Franchise retains the right to:
- (i) establish and license others to establish and operate Fly To Fit businesses outside the Territory, notwithstanding their proximity to the Territory or their impact on the Business;
- (ii) operate and license others to operate businesses anywhere that do not operate under the Fly To Fit brand name; and
- (iii) sell and license othersto sell products and services in the Territory through channels of distribution (including the internet) other than Fly To Fit outlets.
6.1 Determining Location and Territory. If the Location and Territory are not stated on the Summary Page:
- (ii) When Fly To Fit Franchise accepts the Location, it will issue a Location Acceptance Letter in the form of Attachment 2 which states the Location and Territory.
Fly To Fit Franchise shall determine the Territory in its good faith discretion, substantially in accordance with Item 12 of the Franchise Disclosure Document.
If Fly To Fit Franchise fails to state the Territory in writing within 60 days after Franchisee opens the Business to the public, the Territory will be deemed to be the zip codes which include and immediately surround the location of the franchised business and comprise a total of 200,000 population.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor within five miles of Franchisee's Territory or the territory of any other Fly To Fit business operating on the date of termination or transfer, as applicable. If this Agreement is terminated before the Territory is determined, then the area of noncompetition will the Development Area and the territory of any other Fly To Fit business operating on the date of termination.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the 'Territory' is defined as the area stated on the Summary Page of the franchise agreement. If no territory is specified on the Summary Page, the Territory will be determined according to Section 6.1 of the agreement. Section 6.1 describes the process for determining the location and territory, where the franchisee finds a potential location within a defined Development Area and submits it to Fly To Fit for acceptance. Upon acceptance, Fly To Fit issues a Location Acceptance Letter that specifies both the Location and the Territory.
Fly To Fit retains the discretion to determine the Territory in good faith, substantially following the guidelines in Item 12 of the Franchise Disclosure Document. If Fly To Fit fails to define the Territory in writing within 60 days after the franchisee opens for business, the Territory will default to the zip codes including and immediately surrounding the franchised business location, encompassing a total population of 200,000.
This definition of 'Territory' is important because Fly To Fit agrees not to establish or license another business selling similar goods or services under the same trademarks within the franchisee's Territory. However, Fly To Fit retains the right to operate or license others to operate businesses outside the Territory, even if they are near the Territory or impact the franchisee's business. Fly To Fit also reserves the right to sell and license others to sell products and services within the Territory through different channels of distribution, including the internet, that are not Fly To Fit outlets.
The Territory also plays a role in the non-compete agreement. For two years after the franchise agreement expires or is terminated, the franchisee, owners, and their spouses are restricted from having any involvement with a competing business within five miles of the franchisee's Territory or the territory of any other Fly To Fit business. If the Territory is not determined before termination, the non-compete area will be the Development Area and the territory of any other Fly To Fit business.