In most parts of the country, franchisees negotiate territories measured in miles. But, in New York City, a territory with a several-mile radius could effectively provide protection for the entire city. So, if you are buying a franchise in one of the five boroughs, what can you reasonably expect in terms of your “protected” or “exclusive” territory? New York City franchise lawyer Jeffrey M. Goldstein shares his thoughts.
Negotiating Franchise Territory Rights in New York City
If New York City was a state, it would have the 13th largest population in the United States. The city’s population density makes it unique in the U.S., and this has very real—and very significant—implications for franchisees.
Franchisors address this in various ways. One fairly popular choice is to use ZIP Codes. New York City has dozens of ZIP Codes; and, for franchisors that don’t plan to sell too many franchises in the city, apportioning territory rights based on ZIP Codes is a relatively straightforward option that is also relatively easy to monitor and enforce.
Some franchisors use other geographic boundaries. Using roads and radiuses (often well under one mile) to establish territorial borders are both common alternatives to ZIP Code-based territory definitions. Franchisees may also seek to secure exclusivity within a particular borough or neighborhood, although franchisors will typically reject this approach if a franchisee does not have the financial resources needed to build up an operation capable of serving the area’s population.
For B2B franchises, another option is to define franchisees’ territory based on the number of prospective customers in a defined area. For example, a printing or shipping franchise might receive a territory that contains X number of small businesses.
Then, there are franchisors that simply choose to forego offering territorial protections entirely. While franchisees in other areas might need several square miles to have access to 10,000 potential customers, franchisees in New York City could potentially have access to this many customers—if not more—within a single block. If you are thinking about opening a gym or restaurant, for example, you will get more foot traffic in a single day in New York City than most franchisees could imagine. If this is the case, your franchisor may simply take the position that you don’t need a territory in order to succeed.
Ultimately, as with all aspects of buying a franchise, as a franchisee you need to make an informed decision about what you need in terms of a protected or exclusive territory. You also need to be careful to make sure your territory is actually protected or exclusive. Contact us to learn more.
Discuss Your Franchise Opportunity with New York City Franchise Lawyer Jeffrey M. Goldstein
If you are pursuing a franchise opportunity in New York City, we invite you to schedule an appointment at the Goldstein Law Firm. To discuss your options with New York City franchise lawyer Jeffrey M. Goldstein in confidence, call 202-293-3947 or tell us how we can reach you online today.
