Territory Restrictions in Franchising

Territory restrictions in franchising refer to specific geographic areas where a franchisee is allowed to operate their business. These restrictions are established by the franchisor (the company granting the franchise) to protect each franchisee from competition within their designated region. Essentially, a franchisee cannot open another location of the same brand too close to an existing one, which helps ensure a fair market share and promotes business growth. This arrangement can benefit both parties, as it encourages franchisees to invest in their locations without fear of direct competition from the same brand nearby.