Donaldson Walsh franchising lawyers provide business advice on the purpose of a territory

Franchising lawyers at Donaldson Walsh Lawyers report that many franchisors and franchisees may think their franchise system has no territories, but often this is wrong.

Territory restrictions may be used for a range of different purposes, both in relation to:

• the franchisor
• franchisees
• protection of uniformity
• protection between franchisees; and
• to establish certainty.

If, however, that balance is not adjust correctly the use of the concept of territories within a franchise system can lead to problems such as inequity, inefficiency, reduced profitability and the failure of a franchise system.

The use and scope of territory boundaries will vary depending on whether the franchise system is for:

• manufacturing
• wholesale
• business to business
• retail or services; and
• the offering made to the customers.