In the world of litigation there is no other area that provides as much revenue to franchise attorneys as that of franchise territory disputes. A franchisee purchases the franchisors brand and systems which definitely have value. Although perceived or real, nothing has more value than the territory or area of business as defined by the franchise agreement. For those franchisees that purchase the franchised business based strictly on emotion, there is always a greater chance of disputes and possible litigation. Even though the Franchise Disclosure Document may spell out how franchise territories are arrived at, each franchisee may interpret the statements differently. For franchisors that do not support their territories with hard factual data, such as market potential rankings by individual territory including demographic, consumer expenditure data, business by industry, and business by occupation then the franchisor has not properly documented the franchisees territory to avoid disputes in the future. There is additional data that is helpful for franchisors including values & lifestyle as well as geo-classification. If franchisors would provide this data by geographical location including zip codes, yellow page directories, counties, MSA and DMA, as well as State all based around the Territory definition statement contained in their Franchise Disclosure Documents territory disputes would be quickly settled, the franchisee would have a clear understanding of the franchise territory at the beginning of the sales process and both parties could concentrate on what matters the most......growing their individual brand and generating revenue.
There are many franchisors that do not have any data to support the franchised area. For those franchisors that have not studied out the viability of the proposed territory they create a cyle of failure. A failed franchise not only opens the door to litigation or the negotiation of the termination of the agreement it directly impacts the franchisors Item 20 data in the FDD. A little planning and cost at the front end of the process is more than offset by the costs of a failed franchise system and litigation.
For more information on Franchise Territory Documentation visit FranGuides at http://www.franguides.com/Franchise_Territory_Analysis.html.
FranGuides understands that success is driven by how well the Franchise Sales Process is conducted and Franchisees are integrated into your franchise community. No matter the size of your franchise organization we can customize a solution in Franchise Development, (FranGuides evaluates the strength of your development team by using our 8 point Secret Shopping Program.), Marketing and Demographic stats for Franchise Territories, as well stratifying franchise communities by personality types.
