A territorial exclusivity clause in a franchise agreement grants
the franchisee a form of exclusivity to operate a franchise of the
franchisor's network in a territory delimited in the
agreement.
Although, on the surface, such a clause seems simple to draft
(do we not just need to describe the territory and stipulate
that the franchisee is exclusive in it), experience in
franchising shows that, over time, it can raise several important
issues.
First, it is very important to describe very clearly and
precisely the territory to be covered by the exclusivity, which is
not always as easy as one might think. For example, does a
territory delimited by street names include both sides of each
adjacent street? In the case of a territory described by
municipality names, what happens if the boundaries of a
municipality change, for example as a result of a municipal
amalgamation? Over the years, we have therefore seen several major
disputes between franchisors and franchisees
