Exclusive territory
The exclusive territory is the geographic zone defined in the franchise agreement within which the franchisor commits to opening no competing unit and granting no other franchise. It is an essential commercial protection for unit profitability.
In practice
The precise definition of the exclusive territory — by postal code, kilometer radius, or catchment area — is a key negotiation point. A franchisee in a dense urban area may accept a 500-meter radius where a rural franchisee would obtain three full cantons. The most common disputes concern the franchisor’s online sales into the protected zone, an issue that modern agreements address explicitly with digital clauses.