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A aerial view of a neighborhood territory

How Do Exclusive Territory Franchise Agreements Work?

2024-05-15

As you explore different franchising options, you’ll learn that for the most part, franchises are sold based on designated territories. This allows the brand to expand at a measured pace, and it also provides a range of locations for franchise owners to consider. Territory protections are an important part of the decision to pursue a franchise. There are generally two types of protections: exclusive territories and protected territories. We’ll give you an overview of both and then explain why Merry Maids chooses to offer franchisees a protected territory.

The Exclusive Territory Franchise Agreement

As explained by The Franchise Institute, if you have an exclusive territory franchise agreement, your franchise is the only one that can provide the franchisor’s products and services in that region. The franchisor cannot allow other franchises to open in that area, nor can neighboring franchise owners solicit business within your territory. If someone in your geographical region wants the product or service you offer, they must get it from you. Often, exclusive territory franchise agreements are thought to offer the highest protection available to a franchisee, but that isn’t always the case.

Protected Territory Franchise Agreement

Merry Maids offers protected territories that balance the value to the franchise owner with the potential client of the franchisor. A protected territory means a customer could buy the product or service from another vendor, like on the franchisor’s website, or if the territory is not being maximized by the franchise owner, other franchise owners can earn the business of customers in that region. As Merry Maids cleaning franchise opportunities have several revenue streams that are optional for franchise owners, the protected territory agreement is a better way of doing business for everyone. Let’s explore that further.

Merry Maids’ Protected Territories Explained

Merry Maids offers a full-sized territory of 40,000 or more qualified households with an average annual income of $75k or more. The qualification of the households is based on a set of criteria we use to determine the geographical region for specific marketing purposes. We also consider total population, affluence, and census data. We explain the territory in full detail in your franchise agreement. While your franchise agreement is in effect, we will not establish or permit another Merry Maids franchisee to establish in your defined territory. We also won’t allow franchisees to solicit business in your territory.

Meeting Demand with Fellow Franchise Owners

We do have two programs where a neighboring franchise owner could look after customers in your territory, and both are driven by demand. First, due to the need for residential cleaning services, we have an average weekly gross sales requirement for every territory. If you’re not able to meet that requirement, then households in your territory can become potential customers of other franchisees to meet the demand. Second, Merry Maids has a national accounts program that is optional for franchise owners. If you choose not to be part of the program, a neighboring franchise owner could pick up that aspect of business in your territory.

Exploring Item 12 in the FDD

The franchise disclosure document (FDD) will provide a detailed explanation of the territory that accompanies your franchise opportunity. When you’re ready to sign the franchise agreement, the territory will be carved out with detailed geographical information so both you and the franchisor have a clear understanding of the area you will cover.

Explore an Award-Winning Franchise

Merry Maids was ranked No. 102 in the Entrepreneur Franchise 500 list for 2024. In addition, we also ranked No. 9 for top franchises under $100,000, No. 98 for top brands for multi-unit operators, and No. 92 for top global franchises. Whatever your goals in franchising, we’re confident we can meet them. If you’re ready to learn more about our franchise model and join a network of over 900 franchise owners in the Merry Maids family, let’s schedule a conversation !

Contact Merry Maids Today!

Fill out our online form today and one of our franchise development professionals will reach out to book some time to talk. We have a great business model backed by a strong parent company with opportunities to start and grow your business.

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