A franchisor has requested I pay a deposit to secure a territory. Should I go ahead?

It is not uncommon for a franchisor to ask a prospective franchisee to pay a deposit to secure a territory.  If, for example, you are only interested in taking the franchise for a particular territory, then it may be appropriate for you to pay a deposit, provided that there are certain safeguards in place to protect any deposit you pay.  If you do pay a deposit, you should ensure that the basis on which you are paying the deposit is detailed in writing. As well as seeking written confirmation of the amount of the deposit paid, you should also seek written confirmation from your franchisor that:  > The deposit is refundable in full (or part) if you do not sign the franchise agreement, together with details of any restrictions on the refund. > The deposit will count towards payment of any initial fee that may be payable under the franchise agreement if, and when, you sign the franchise agreement. > The territory is secured for a defined and stated period of time. > You have exclusivity in relation to the territory.