Does Red Wagon Club grant franchisees an exclusive territory?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 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.
You may operate your RWC Business from the office of the Affiliate Law Firm Business. If you operate your RWC Business from any other space, then you must obtain our approval prior to relocation, which will not be unreasonably withheld. Once you have identified the premises for your RWC Business, we will designate a protected territory around your RWC Business within which you will have certain protected rights (the "Protected Territory").
Your Protected Territory will typically contain a maximum of 200,000 targeted households as determined by us (or our designee) and you prior to signing the Franchise Agreement. The size of your Protected Territory may vary from the territory granted to other franchisees based on the location and demographics surrounding your RWC Business.
The boundaries of your Protected Territory may be described in terms of Zip Codes, streets, landmarks (both natural and man-made) or county lines, or otherwise delineated on a map. If we determine, in our discretion, to base your Protected Territory on population, then the sources we use to determine the population within your Protected Territory will be supplied by (a) the territory mapping software we determine to license or otherwise use, or (b) publicly available population information (such as data published by the U.S. Census Bureau or other governmental agencies and commercial sources).
As long as you are in compliance with your Franchise Agreement, we will not operate, or grant a license to a third-party to operate, during the term of your Franchise Agreement, an RWC Business located within the Protected Territory, subject to our reservation of rights below.
You will not be permitted to intentionally place advertisements in the protected territory of another Red Wagon Club franchisee at any time during the term of your Franchise Agreement. However, you and other RWC Businesses will be able to provide services to potential clients that visit or otherwise reach out to your RWC Businesses.
Your rights to the Protected Territory are dependent on your compliance with your obligations under the Franchise Agreement and your meeting of a certain minimum quarterly Membership Agreement quota (the "Performance Requirement"), as follows:
| Minimum Number of New Membership Agreements During Each Measurement Period | Measurement Period |
|---|---|
| 25 | From the later of the opening of Franchisee’s RWC Business or the 2nd fiscal quarter of such year through the end of the 1st calendar year of the term of your Franchise Agreement |
| 30 | 2nd calendar year of the term of your Franchise Agreement |
| 36 | 3rd calendar year of the term of your Franchise Agreement |
| 42 | 4th calendar year of the term of your Franchise Agreement |
| 48 | 5th calendar year of the term of your Franchise Agreement |
Source: Item 12 — TERRITORY (FDD pages 32–33)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, franchisees do not receive an exclusive territory. Instead, Red Wagon Club designates a "Protected Territory" around the franchisee's business location after the franchisee identifies their business premises and receives approval from Red Wagon Club. This Protected Territory typically contains a maximum of 200,000 targeted households, as determined by Red Wagon Club. The size of the Protected Territory may vary compared to other franchisees, depending on the location and demographics of the franchisee's Red Wagon Club business. The boundaries of the protected territory can be defined using Zip Codes, streets, landmarks, county lines, or a map.
As long as the franchisee complies with the Franchise Agreement, Red Wagon Club will not operate or license a third party to operate a Red Wagon Club business within the Protected Territory during the term of the Franchise Agreement. However, franchisees are not allowed to intentionally place advertisements in another Red Wagon Club franchisee's protected territory. Both franchisees can provide services to potential clients who visit or contact their respective businesses.
Red Wagon Club does reserve certain rights, including the right to operate or franchise Red Wagon Club businesses outside the franchisee's Protected Territory. They may also develop or become associated with other businesses, even those offering similar services, as long as those businesses within the Protected Territory are not identified by the Red Wagon Club Marks. Red Wagon Club can also market and sell through alternative channels, such as the Internet, even within a franchisee's Protected Territory.
To maintain the Protected Territory, a Red Wagon Club franchisee must meet a minimum quarterly Membership Agreement quota, referred to as the "Performance Requirement." For example, during the 2nd calendar year of the franchise term, the franchisee must obtain 30 new Membership Agreements. Failure to meet the Performance Requirement may result in a mandatory corrective training program, reduction or elimination of the Protected Territory, or even termination of the Franchise Agreement by Red Wagon Club.