To whom does the Pearce Bespoke franchisee pay the Encroachment Fee?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
You may not advertise, market, solicit, sell, or service customers outside your Franchised Territory ("Non-Exclusive Customers"), unless you are solicited or have a prior verifiable relationship with the Non-Exclusive Customer. Even if you sell to a Non-Exclusive Customer, you must pay us or the incumbent franchise owner an encroachment fee of twenty percent (20%) of the Gross Sales attributed to the Non-Exclusive Customers sales outside of your Franchised Territory ("Encroachment Fee").
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD pages 30–31)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, a franchisee may be required to pay an encroachment fee if they serve customers outside of their designated territory. These customers are referred to as "Non-Exclusive Customers." The franchisee must seek Pearce Bespoke's prior written consent before servicing these customers.
Specifically, the franchisee must pay an encroachment fee amounting to twenty percent (20%) of the gross sales attributed to these Non-Exclusive Customers. This fee is paid either to Pearce Bespoke itself or to the incumbent franchise owner, depending on the specific circumstances.
This policy is in place because Pearce Bespoke franchisees do not receive an exclusive territory. This means that franchisees may face competition from other franchisees, from outlets that Pearce Bespoke owns, or from other channels of distribution or competitive brands that Pearce Bespoke controls. This encroachment fee serves as compensation to either Pearce Bespoke or the existing franchisee who might otherwise have served that customer within their territory.