What is a 'Protected Territory' for a Red Wagon Club franchise?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
FRANCHISEE OWNER Print Name: Print Name:
ITEM 12. TERRITORY
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.
Source: Item 12 — TERRITORY (FDD pages 32–33)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, a franchisee will not receive an exclusive territory. However, once a franchisee identifies the premises for their Red Wagon Club business, the franchisor will designate a 'Protected Territory' around the business, granting the franchisee certain protected rights. This territory typically contains a maximum of 200,000 targeted households, as determined by Red Wagon Club prior to signing the Franchise Agreement. The size of the Protected Territory may vary compared to other franchisees, depending on the location and demographics surrounding the franchisee's Red Wagon Club business.
The boundaries of the Protected Territory may be defined using Zip Codes, streets, landmarks, county lines, or delineated on a map. If the territory is based on population, Red Wagon Club will use territory mapping software or publicly available information, such as data from the U.S. Census Bureau, to determine the population within the Protected Territory. As long as the franchisee complies with the Franchise Agreement, Red Wagon Club will not operate or grant a license to a third party to operate a Red Wagon Club business within the Protected Territory during the term of the Franchise Agreement, subject to certain reserved rights.
It is important to note that the franchisee is not permitted to intentionally place advertisements in the protected territory of another Red Wagon Club franchisee. However, franchisees can provide services to potential clients who visit or contact their Red Wagon Club businesses. The rights to the Protected Territory are dependent on the franchisee's compliance with the Franchise Agreement and meeting a minimum quarterly Membership Agreement quota, referred to as the 'Performance Requirement'.
If a franchisee fails to meet the Performance Requirement, Red Wagon Club may institute a mandatory corrective training program, reduce or eliminate the Protected Territory, or terminate the Franchise Agreement. The minimum number of new Membership Agreements required during each measurement period increases annually, starting with 25 in the first year and increasing to 48 by the fifth year. This Performance Requirement is a critical factor for prospective franchisees to consider, as failure to meet it could result in the loss of their Protected Territory or termination of their franchise agreement.