Every franchise agreement should discuss the issue of the source of customers. This is known as the geographical territory, protected territory or exclusive territory. Many agreements spell out the zone or area of your customer source. It is important to understand the Geographical, Protected or Exclusive Territory Clause in the Franchise Agreement.
Exclusive Territory Clause
A clause customarily found in the Franchise Agreement. It identifies the territory belonging to the Franchisee. The Franchisee needs to understand how this clause is worded and what it means. Protect yourself by using other language for the clause to maintain and safeguard your customer base.