What are 'legacy territories' in the context of a Management Recruiters franchise?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
Management Recruiters International, Inc., previously granted exclusive territories ("legacy territory(ies)") and some of those territories are still in effect. Existing members with legacy territories are under no obligation to permit another member to relocate in the legacy territory. The business is conducted largely via long distance and Internet so there is limited, if any, impact on your business from nearby members. Because recruiters work specific industries, you may in fact find that your closest competitor in the MRINetwork is located in a different part of the United States. With MRI's prior written approval, owners of single site locations are permitted to relocate anywhere in the United States subject to any legacy territory rights. If you choose to locate or relocate to a legacy territory, you may be required to pay a supplemental royalty to the existing member to obtain their consent. This is typically two percent (2%) of Net Cash-In and is dependent upon the decision of the legacy territory owner.
Source: Item 12 — TERRITORY (FDD pages 40–43)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, 'legacy territories' refer to exclusive territories that Management Recruiters previously granted to franchisees. While new franchisees do not receive exclusive territories, some of these legacy territories are still in effect. This means that some existing franchisees still retain exclusive rights to their originally assigned areas.
For a prospective Management Recruiters franchisee, this has a few implications. First, new franchisees will not have any territorial protection, and Management Recruiters can sell additional franchises within the same geographic location. Second, if a new franchisee wishes to relocate to a legacy territory, they may need to obtain permission from the existing franchisee who owns that territory.
To obtain consent to relocate to a legacy territory, the new franchisee may be required to pay a supplemental royalty to the existing legacy territory owner. This royalty is typically two percent (2%) of Net Cash-In, but the final decision rests with the legacy territory owner. Because the Management Recruiters business is conducted largely via long distance and the Internet, the FDD indicates there is limited impact on a franchisee's business from nearby members. However, the potential need to negotiate and pay royalties to a legacy territory owner is a factor to consider when choosing a location.