Can I negotiate the size of my franchise’s trading territory?

A franchise agreement is usually presented to a potential franchisee on a ‘take it or leave it’ basis. However, if a franchisor is willing to consider negotiating the size of the territory the franchisor will need to be convinced by the potential franchisee that if, for example, he/she wants a larger territory they have the financial and operational capabilities to service the whole of the territory to the franchisor’s satisfaction. Any increase in territory size may also mean an increase in the initial fee payable.  Before approaching the franchisor to discuss negotiating the size of the territory a potential franchisee will need to consider whether a discussion is actually required. Whether it is relevant will depend on whether the territory granted is ‘exclusive’ or ‘non-exclusive’. A potential franchisee will usually be looking for an exclusive territory on the basis that this means that the franchisor agrees not to establish a competing business or allow another franchisee to establish a competing business within the territory granted.  Conversely, a non-exclusive territory basically means that the franchisor or other franchisees will be free to operate in the territory granted.  If the franchisor is granting non-exclusive territories to all of its franchisees then there will be little need to negotiate the size of the territory as each franchisee will be free to operate in any territory.