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Will My Franchisor Limit Competition?

Aug 26, 2008
As with starting any business or franchise you want to know that you will have the best chance at success as possible. If you start you own business or franchise the one thing you don't have any control over is who opens up next to you or near you. This is an area of concern for franchises since you hold the same name as many others. For example if you owned a BumperDoc auto body franchise you would not want another BumperDoc auto body franchise to open on the same intersection or plaza as you. So a good question to ask your future franchisor is if they will limit competition in any way.

Normally what the franchisor does is give you a certain amount of territory in which you can operate. They will usually put in the contract that another one of their franchises will not open within a certain mile radius of your franchise location. Remember you want to have enough business to keep your franchise going for a long time. The franchisor may try to tell you that what they offer is great or plenty. However, you need to take a close look at where you are opening your franchise. If you are in a heavily populated area then an 8 mile radius may be just fine. But if you are in an area in which not very many people live, 8 miles would not be a good offer at all.

Also once the franchisor tells you the limitations of competition from them and you agree with it make sure it is in your contract. This is very important. The franchisor and you are held to the contract, not a verbal agreement. So, if you don't see it in the contract or if it is incorrect in any way do not sign unless it is corrected first.

If you are unsure of the franchisors agreements in this area you may want to consult a franchise attorney. Having a franchise attorney can be of great help to you and can be the key to your success as a franchise owner!

Keep in mind that even if the franchisor sets limits or territories for their franchises there is no way for them to keep other competition from other business and franchises away. For example with your BumperDoc auto body franchise, there is no way for BumperDoc to keep another franchise such as Collision on Wheels from opening up next to you. You will most likely always have some kind of competition near you; you just don't want it to be coming directly from your franchise family.

Since you cannot control the other competition that is around already or that may move in to the area, it is important that you choose a good location for you business! You must choose a location that will produce the greatest gains for your franchise industry and market.

Lastly, if the franchisor does not offer any limitations of competition or territories you should definitely think twice before beginning your franchise career with that franchisor!

Find a franchisor that meets all of your needs and that will help put you on the path to success!
About the Author
For more information on an automotive franchise, visit BumperDoc auto body franchise and start your path to business ownership.
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