As a franchisor, you earn most revenue once the franchise units in your franchise system profit. thus it's in your best interest to envision these units thrive. If you allot every franchise unit a disproportionately massive franchise territory, you may have a lot of potential customers than you'll be able to serve. chances are high that that you simply can find yourself losing them to competitive businesses. this is often not ideal. On the opposite hand, if you allot every franchise unit a disproportionately tiny territory, or if you permit quite one franchisee to line up franchise units in one territory, you'll simply find yourself undermining all of the franchise units. they'll realize themselves competitive for a restricted range of consumers. Sooner or later, a minimum of one in every of them can go beneath as a result of it'll be not possible to pull in enough sales or profits to continue running.
In order to avoid future disagreements together with your franchisees over franchise territory, you want to certify that this issue is addressed long and in width within the franchise documents (i.e. the franchise speech act document and also the franchise agreement). most significantly the conversations on the topic ought to occur before any documents area unit signed or transactions between you and your prospective franchisees completed. Hashing out details of this type beforehand is that the best thanks to make sure that franchising is as sleek a method as doable.
There area unit variety of details you ought to clarify in your conversations together with your franchisees regarding territories. you ought to confirm to them what the character of the territories are going to be (i.e. exclusive, non-exclusive or non-existent). you ought to conjointly clarify what the method of determinant territories are going to be. If you reserve the proper to work out the placement of the franchise unit, you ought to say thus. If the franchisee is allowed to grant some input into the decision-making method, you ought to indicate this. you ought to even be clear regarding whether or not you may be imposing conditions like minimum sales quotas on your franchisees.