Will Monicals Pizza compensate a franchisee for sales made in their area through an alternate channel of distribution?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. The area that you will receive (called an "area of primary responsibility" or "area") will be described and depicted in a map attached to the Franchise Agreement. We determine the boundaries of the area based on a variety of factors, including population, median population age, proximity to competitors, median income characteristics, proximity to other franchisees and natural, physical or political boundaries.
We reserve the right to establish other franchised or company-owned businesses in your area under other systems using other trademarks at locations inside and outside of your area that may compete with your franchised restaurant. We also reserve the right to establish other channels of distribution for the sale of Monical's Pizza menu items, including Internet sales, catalog sales, telemarketing, or other direct marketing sales while using our principal trademark or any other of our trademarks. These activities may compete with your franchised restaurant. We will not compensate you for any sales made in your area through an alternate channel of distribution. You may not focus your marketing on customers located outside your area of primary responsibility, although you may collect e-mail addresses and cellphone numbers from guests of your restaurants for use in future e-mail or text marketing activities. Any sales you make of any products to be resold will be made only in strict compliance with the provisions of the Confidential Operations Manual. Unless you are advertising cooperatively with another franchisee, you may not advertise in any media primarily circulated within another franchisee's area of primary responsibility without our permission.
Source: Item 12 — TERRITORY (FDD pages 27–28)
What This Means (2025 FDD)
According to the 2025 Monicals Pizza Franchise Disclosure Document, franchisees will not be compensated for sales made in their area through alternate channels of distribution. Monicals Pizza retains the right to establish other channels of distribution, such as internet sales, catalog sales, telemarketing, or other direct marketing sales, even if these compete with a franchisee's restaurant.
This means that Monicals Pizza can sell its products directly to customers within a franchisee's designated area through online platforms or other means without sharing any of the revenue generated from those sales with the franchisee. The franchisee's area is defined as the "area of primary responsibility," the boundaries of which are determined by Monicals Pizza based on factors like population, demographics, competition, and proximity to other franchisees.
This lack of compensation for alternate channel sales could impact a franchisee's potential revenue, especially if Monicals Pizza actively promotes online or direct sales within the franchisee's area. While franchisees are allowed to collect customer contact information for their own marketing efforts, they are restricted from focusing their marketing efforts outside their primary area. This policy highlights the importance of carefully evaluating the potential impact of these alternative distribution channels on a franchisee's profitability and discussing these concerns with Monicals Pizza before investing in a franchise.