Does the Mrcool Franchise Agreement grant an exclusive license to use the System to Mrcool franchisees?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, Franchisee desires to obtain the non-exclusive license and right to use the System in the development and operation of one Center from a single fixed location within a designated territory and pursuant to the terms of this Agreement.
Franchisee may face competition from other MRCOOL Centers and other System franchisees with Center locations and/or designated territories, including Centers that are located within Closed Markets and/or located adjacent to and/or within a close proximity to Franchisee's Center Location and/or Designated Territory.
Franchisee agrees that although Franchisor may disapprove of any marketing medium that is distributed and/or reaches outside of Franchisee's Designated Territory, that Franchisor is not obligated to do so and that Franchisee may face competition from other MRCOOL Centers and System franchisees that market and promote their MRCOOL Center through internet, mail, public relations, and other marketing activities and mediums that are distributed to or within Franchisee's Designated Territory.
Franchisee agrees that
Franchisee shall not receive any compensation whatsoever if Franchisor or another System franchisee solicits customers from within Franchisee's Designated Territory; and
(9) The foregoing rights granted in this Article 2.A. are subject to and contingent upon each and every, term and condition of this Agreement, the rights of any prior user, and are non-exclusive and subordinate to the Reserved Rights.
2.D. RESERVATION OF RIGHTS
Franchisor on behalf of itself, its affiliates, parents, and its assigns retains all rights, on any and all terms and conditions that Franchisor deems advisable and without any compensation or consideration to Franchisee to engage in the following activities (the "Reserved Rights"): (a) operate and grant to others the right to operate a Franchised Business, MRCOOL Center and/or other Centers using the System and Licensed Marks at locations outside Franchisee's Designated Territory; (d) use the Licensed Marks and System to distribute the Approved Services and Products or products and services similar to the Approved Services and Products in Alternative Channels of Distribution within or outside Franchisee's Designated Territory;
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, the franchise agreement grants a non-exclusive license to use the Mrcool System. While franchisees are typically granted a designated territory, Mrcool retains significant rights, including the right to operate or franchise others outside the franchisee's territory. Mrcool also retains the right to use the Licensed Marks and System to distribute approved services and products through alternative channels of distribution, within or outside the franchisee's designated territory.
This means that while Mrcool franchisees benefit from operating within a defined area, they may face competition from other Mrcool centers, including those in 'Closed Markets' or adjacent territories. Additionally, Mrcool itself or other franchisees can market and promote their centers through various channels, such as the internet, even within a franchisee's designated territory.
The rights granted to the franchisee are contingent upon compliance with all terms and conditions of the agreement and are subordinate to Mrcool's reserved rights. These reserved rights allow Mrcool to engage in activities such as operating or franchising businesses using the System and Licensed Marks outside the franchisee's territory, acquiring or merging with other businesses (even competitive ones), and using alternative distribution channels. Franchisees do not receive compensation if Mrcool or another franchisee solicits customers from within their designated territory.
In practical terms, a Mrcool franchisee's success depends not only on their own efforts within their territory but also on Mrcool's strategic decisions and the activities of other franchisees. The non-exclusive nature of the license and the reserved rights retained by Mrcool introduce a level of competition and potential overlap that prospective franchisees should carefully consider. It is important to understand the specific boundaries of the designated territory and the potential for competition from other Mrcool ventures.