Does the Mr. Sandless Franchise Grant agreement reserve rights regarding alternative channels of distribution?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
We retain the right to establish, or to grant others the right to establish, Mr. Sandless Businesses outside the Designated Territory. You acknowledge and agree that certain of our or our affiliates' products, whether now existing or developed in the future and whether or not designated as "proprietary products", may be distributed in the Designated Territory by us, our affiliates, our franchisees, licensees or designees, in such manner and through such channels of distribution as we, in our sole discretion, shall determine. Such alternative channels of distribution shall include, but are not limited to, sales of any products offered hereunder or other products using the Proprietary Marks or using other marks or private labeling at or through home improvement stores, home shows, the internet (including orders via our Website), mail order or other distributions methods or supply chains. We reserve the right, among others, as to any distribution arrangements relating thereto. You understand that this Agreement grants you no rights: (i) to distribute such products via alternative channels of distribution as described in this section; or (ii) to share in any of the proceeds received by any party from such sales via alternative channels of distribution. We will not sell the Mr. Sandless services in a "do it yourself" kit by any means which bypasses the franchise System.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to the 2025 Mr. Sandless Franchise Disclosure Document, Mr. Sandless retains specific rights regarding alternative channels of distribution. Mr. Sandless reserves the right to establish Mr. Sandless businesses outside of a franchisee's designated territory and to distribute products through various channels. These channels include home improvement stores, home shows, the internet (including orders via the Mr. Sandless website), mail order, and other distribution methods or supply chains.
This reservation of rights means that a Mr. Sandless franchisee's territory is not exclusive in all senses. While Mr. Sandless agrees not to establish another franchised location within the franchisee's designated territory as long as the franchisee is in substantial compliance with the agreement, Mr. Sandless and its affiliates can still sell products and services through other channels within that territory. The franchisee has no right to share in any proceeds from these alternative channels.
This aspect of the agreement is fairly common in franchising, as franchisors often seek to maximize brand exposure and sales through diverse avenues. However, it's crucial for a prospective Mr. Sandless franchisee to understand that their exclusive rights are limited to traditional franchise operations within their territory and do not extend to online sales or retail partnerships managed by the franchisor. Mr. Sandless does state that they will not sell the Mr. Sandless services in a "do it yourself" kit by any means which bypasses the franchise System.
Therefore, a potential franchisee should carefully consider the implications of these reserved rights and how they might affect their business. Understanding the potential for competition from alternative channels within their territory is essential for accurate financial projections and business planning.