FRANCHISE TERRITORY AGREEMENT

[// GUIDANCE: This addendum or standalone agreement defines territorial rights. Can be used to grant, modify, or expand territorial rights. Must be consistent with FDD Item 12 disclosure.]

PARTIES

THIS FRANCHISE TERRITORY AGREEMENT (this "Agreement") is made as of [DATE] by and between:

FRANCHISOR: [FRANCHISOR_NAME], a [STATE] [ENTITY_TYPE] ("Franchisor")

FRANCHISEE: [FRANCHISEE_NAME], a [STATE] [ENTITY_TYPE] ("Franchisee")

RECITALS

A. Franchisor and Franchisee are parties to a Franchise Agreement dated [AGREEMENT_DATE] (the "Franchise Agreement") for a [FRANCHISE_TRADE_NAME] franchise located at [FRANCHISE_ADDRESS] (the "Franchised Business").

B. The parties desire to define Franchisee's territorial rights in connection with the Franchised Business.

1. GRANT OF TERRITORIAL RIGHTS

1.1 Designated Territory

Subject to the terms of this Agreement, Franchisor grants to Franchisee [EXCLUSIVE/PROTECTED/NON-EXCLUSIVE] territorial rights within the geographic area described in Exhibit A (the "Designated Territory").

1.2 Type of Territory

☐ OPTION A: Exclusive Territory
During the term of the Franchise Agreement, provided Franchisee is in full compliance and meets all Performance Requirements, Franchisor shall not:
(a) Establish, or license others to establish, a [FRANCHISE_TRADE_NAME] business with a physical location within the Designated Territory; or
(b) Solicit customers located within the Designated Territory.

☐ OPTION B: Protected Territory
During the term of the Franchise Agreement, provided Franchisee is in full compliance and meets all Performance Requirements, Franchisor shall not establish, or license others to establish, a [FRANCHISE_TRADE_NAME] business with a physical location within the Designated Territory. This protection does not restrict:
(a) Sales or solicitation of customers within the Designated Territory from locations outside the Designated Territory;
(b) Internet, catalog, or other non-physical channel sales; or
(c) Sales to national or regional accounts.

☐ OPTION C: Non-Exclusive Territory
Franchisee acknowledges that it has no exclusive or protected territory. Franchisor and its affiliates may:
(a) Establish or license [FRANCHISE_TRADE_NAME] businesses at any location;
(b) Solicit and serve customers anywhere; and
(c) Use any distribution channels without restriction.

2. TERRITORY DESCRIPTION

2.1 Boundary Definition

The Designated Territory is defined as:

☐ Radius-Based:
A circular area with a radius of [MILES] miles from the Franchised Business location at [ADDRESS].

☐ ZIP Code-Based:
The area comprising the following ZIP codes: [LIST_ZIP_CODES]

☐ Political Boundaries:
[CITY/COUNTY/STATE] or portions thereof as described in Exhibit A.

☐ Custom Boundaries:
As depicted on the map attached as Exhibit A, with boundaries along [DESCRIPTION OF BOUNDARIES - streets, highways, rivers, etc.].

2.2 Territory Map

A map depicting the Designated Territory is attached as Exhibit A and incorporated herein by reference.

2.3 Boundary Disputes

In the event of any discrepancy between the written description and the map, [THE WRITTEN DESCRIPTION / THE MAP] shall control.

3. RESERVED RIGHTS

3.1 Franchisor's Reserved Rights

Notwithstanding the territorial rights granted herein, Franchisor expressly reserves the right to:

(a) Alternative Channels: Sell products and services under the Marks through internet, catalog, telemarketing, wholesale, and other non-traditional channels, to customers located within the Designated Territory;

(b) National Accounts: Service national, regional, or governmental accounts anywhere, including within the Designated Territory;

(c) Non-Traditional Locations: Establish or license [FRANCHISE_TRADE_NAME] businesses at non-traditional locations within the Designated Territory, including:
☐ Airports
☐ Stadiums and arenas
☐ Universities and colleges
☐ Military bases
☐ Hospitals
☐ Hotels
☐ Casinos
☐ Convention centers
☐ Highway rest stops
☐ Theme parks
☐ Other: _________________________________

(d) Existing Locations: Continue to operate or license locations existing within the Designated Territory as of the date of this Agreement, including:
[LIST EXISTING LOCATIONS]

(e) Acquisitions: Acquire, be acquired by, or merge with businesses that have existing locations within the Designated Territory;

(f) Different Marks: Operate or license businesses under different trademarks and brands within the Designated Territory;

(g) Advertising: Advertise and promote [FRANCHISE_TRADE_NAME] products and services through any media to any audience;

(h) Product Distribution: Distribute products bearing the Marks through retail stores, grocery stores, and other third-party retailers within the Designated Territory; and

(i) Other Reserved Rights: [SPECIFY ANY OTHER RESERVED RIGHTS]

4. PERFORMANCE REQUIREMENTS

4.1 Minimum Performance

To maintain territorial rights, Franchisee must meet the following Performance Requirements:

4.2 Measurement

Performance will be measured based on [METHODOLOGY]. Franchisor will notify Franchisee in writing of performance results within [DAYS] days after each measurement period.

4.3 Cure Period

If Franchisee fails to meet Performance Requirements, Franchisee shall have [CURE_DAYS] days to cure the deficiency. If Franchisee fails to meet Performance Requirements for [NUMBER] consecutive periods or [NUMBER] periods within any [NUMBER]-month period, Franchisor may reduce or eliminate Franchisee's territorial rights upon [DAYS] days written notice.

5. TERRITORIAL MODIFICATIONS

5.1 Reduction of Territory

Franchisor may reduce the Designated Territory if:

(a) Franchisee fails to meet Performance Requirements;
(b) Franchisee defaults under the Franchise Agreement;
(c) Franchisee consents in writing; or
(d) [OTHER CONDITIONS]

5.2 Expansion of Territory

Franchisee may request expansion of the Designated Territory by submitting a written request to Franchisor. Franchisor may grant, deny, or condition such request in its sole discretion.

5.3 Modification Fee

Any modification of the Designated Territory may require payment of a modification fee of $[MODIFICATION_FEE].

6. CROSS-BORDER ACTIVITIES

6.1 Customer Location

A customer is considered to be located within the Designated Territory based on [CUSTOMER'S BILLING ADDRESS / CUSTOMER'S SERVICE ADDRESS / CUSTOMER'S PRIMARY RESIDENCE].

6.2 Marketing Outside Territory

Franchisee shall not actively market or solicit customers located outside the Designated Territory without Franchisor's prior written consent.

6.3 Acceptance of Orders

Franchisee [MAY / MAY NOT] accept orders from customers located outside the Designated Territory who independently contact the Franchised Business.

7. RELOCATION

7.1 Relocation Within Territory

If Franchisee relocates the Franchised Business to a new location within the Designated Territory (with Franchisor's approval as required by the Franchise Agreement), the territorial rights shall apply to the new location.

7.2 Relocation Outside Territory

If Franchisee relocates outside the Designated Territory, new territorial rights may be negotiated.

8. TERMINATION OF TERRITORIAL RIGHTS

8.1 Automatic Termination

Territorial rights shall automatically terminate upon:

(a) Termination or expiration of the Franchise Agreement;
(b) Transfer of the franchise (new territorial rights negotiated with transferee);
(c) Franchisee's uncured default; or
(d) Franchisee's failure to meet Performance Requirements as specified in Section 4.

8.2 Effect of Termination

Upon termination of territorial rights:

(a) Franchisor may establish or license [FRANCHISE_TRADE_NAME] businesses anywhere, including within the former Designated Territory;
(b) Franchisee may continue to operate the Franchised Business at its current location (subject to the Franchise Agreement); and
(c) Franchisee shall have no claim against Franchisor for territorial encroachment.

9. REPRESENTATIONS AND ACKNOWLEDGMENTS

9.1 Franchisee Acknowledges

Franchisee acknowledges and agrees that:

(a) Territorial rights are granted as a privilege, not a right;
(b) Territorial rights may be reduced or eliminated for failure to perform;
(c) Franchisor's reserved rights may impact Franchisee's business;
(d) Territorial rights do not guarantee exclusivity of customers;
(e) Changes in the competitive environment may affect Franchisee's business regardless of territorial rights; and
(f) Franchisor has made no representations regarding the potential profitability of the Designated Territory.

9.2 No Guarantee

The grant of territorial rights is not a guarantee, warranty, or representation that the Designated Territory is adequate, appropriate, or will be profitable for Franchisee's business.

10. GENERAL PROVISIONS

10.1 Relationship to Franchise Agreement

This Agreement is incorporated into and made part of the Franchise Agreement. In the event of any conflict regarding territorial matters, this Agreement shall control.

10.2 Amendment

This Agreement may be amended only in writing signed by both parties.

10.3 Governing Law

This Agreement shall be governed by the same law governing the Franchise Agreement.

10.4 Severability

If any provision is held invalid, the remaining provisions shall remain in effect.

SIGNATURES

FRANCHISOR:

[FRANCHISOR_NAME]

FRANCHISEE:

[FRANCHISEE_NAME]

EXHIBIT A: TERRITORY MAP AND DESCRIPTION

Written Description:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________

ZIP Codes Included (if applicable):
____________________________________________________________

Boundaries:
- North: _________________________________
- South: _________________________________
- East: _________________________________
- West: _________________________________

[ATTACH MAP]

NOTICE: This template is provided for informational purposes only and does not constitute legal advice. Territory grants must be consistent with FDD Item 12 disclosure. Consult qualified franchise counsel before granting or modifying territorial rights.