Dogs Love Running! - the blog for pet owners and pet professionals
What's An Exclusive Franchise Territory?
"Location, location, location."
You've probably heard that phrase a lot and that's because picking the right location is the first rule in determining the potential success of many businesses. And, when it comes to buying a franchise, this rule is no different.
Any great franchisor should help you figure out the best location for your business. For example, our dog walking franchise does an extensive demographic research study of your local market to determine if your market has the "right" type of customers (some do and some don't) and, if so, where most of them are located.
An exclusive territory guarantees and entitles you to customers in a specific area.
For example, a fast-food franchise that has non-exclusive territories may open 3 franchised locations all within a few square miles and potentially cannibalize sales from one another. The franchisor benefits because all three locations are making sales. However, each individual franchisee may be at a disadvantage due to losing customers who may go to another nearby location that they don't own.
A franchisor, like Dogs Love Running!, with exclusive territories wouldn't allow this to happen. The "exclusive territory" is what protects the franchisee by prohibiting another location to open too close by or, as in the case of a service business like a dog walking franchise, prohibit customers from buying from certain franchisees that don't "own" the territory in which they live.
A common approach is for franchisees to own certain zip codes. So, if two franchiees owned adjacent territories where one side of the street is one zip code and the other side of the street is another zip code, it makes it very easy to determine which franchisee gets which customer. In fact, in a franchise with exclusive territories, it would typically be required that a franchisee refer over to another local franchisee an inquiry that came from a customer in that other franchisee's territory, even if the customer didn't contact that other franchisee first.
Overall, the benefit to this type of "exclusive territory" system is that franchisees can develop a cooperative environment between themselves because they're not worried about an agressive franchisee that may be back-stabbing them just to get a customer, as could happen in a non-exclusive territory system.
If you're investigating franchises and want to know more about choosing a location, just contact us and we can give you some ideas.
