Can two franchisees from the same brand compete in the same area?

Yes, if the franchise system uses non-exclusive territories or if the franchise agreement does not include territory protections. This is more common than many franchise buyers realize. Always check Item 12 of the FDD to understand what territorial protections you receive — or do not receive — before investing.

What happens if a customer from outside my territory comes to my location?

In most franchise systems, you can serve any customer who walks through your door or contacts you directly, regardless of where they live. Territory protections typically prevent the franchisor from opening another location in your area — they do not restrict where customers choose to go. However, some systems have specific rules about marketing outside your territory or soliciting customers in another franchisee's area.

Can I lose my exclusive territory?

Some franchise agreements include performance requirements tied to territorial exclusivity. If you do not meet minimum revenue, customer count, or other operational benchmarks, the franchisor may have the right to reduce your territory or remove exclusivity. These provisions are disclosed in the franchise agreement. Make sure the performance thresholds are realistic and achievable.

How do I know if a territory is big enough?

A good franchisor will help you analyze your territory's potential during the discovery process. Key factors include the number of households, demographic fit, competition, and accessibility. Talk to existing franchisees in similar markets to understand what customer counts and revenue levels they have achieved. Your territory should contain enough potential customers to support your financial goals.

Can I buy additional territories later?

Many franchise systems allow existing franchisees to acquire additional territories, either by opening a new location or by purchasing the rights to an adjacent area. Some systems offer multi-unit or area development agreements upfront that reserve additional territories for you. The availability, process, and cost of acquiring additional territories vary by system and are typically outlined in the franchise agreement.

What Is a Franchise Territory? Exclusive vs. Not

What Is a Franchise Territory?

A franchise territory is the geographic area assigned to you under your franchise agreement. It defines the boundaries within which you operate and, depending on the terms, may protect you from competition by other franchisees in the same system.

Territory details are disclosed in Items 12 of the Franchise Disclosure Document (FDD). This is one of the sections that deserves your closest attention because it directly affects your customer base, revenue potential, and long-term business value.

Not all territories are created equal. The size, definition, and level of protection vary significantly between franchise systems — and even between locations within the same system. Understanding the differences is essential before you commit.

Exclusive vs. Non-Exclusive Territories

The most important distinction in franchise territories is whether yours is exclusive or non-exclusive.

Exclusive territory means the franchisor agrees not to open or license another franchise location within your defined area. This gives you a protected customer base and eliminates intra-brand competition. If a customer in your territory wants the service, they come to you. Exclusive territories are generally more valuable and more desirable for franchisees.

Non-exclusive territory means the franchisor can open additional locations or grant other franchisees the right to operate in or near your area. You may have a defined territory for marketing purposes, but you do not have protection against another franchisee opening nearby. This is more common than you might expect, especially in food and retail franchises.

Protected territory with exceptions. Many franchise agreements fall somewhere in between. You may have an exclusive territory for brick-and-mortar locations, but the franchisor reserves the right to sell through other channels — like e-commerce, corporate accounts, or alternative venues — within your area. Read the fine print carefully to understand exactly what is and is not protected.

The type of territory you receive should be a major factor in your decision. An exclusive territory with clear boundaries gives you more confidence in your investment. A non-exclusive territory means you are more vulnerable to competition from your own brand.

How Territories Are Defined

Franchise territories can be defined in several ways, and the method used affects what you actually get:

Geographic boundaries. Your territory is defined by specific boundaries — zip codes, county lines, streets, or city limits. This is the most straightforward approach and makes it easy to know exactly where your territory begins and ends.

Radius. Your territory is a circle around your location, measured in miles. This is simple but can create overlap issues in densely populated areas where two franchisees' radii intersect.

Population-based. Your territory is defined to contain a certain number of people or households. The actual geographic size adjusts based on population density — a territory in a city might cover just a few square miles, while the same population count in a rural area could span an entire county.

Demographic or market-based. Some franchisors define territories based on market characteristics like household income, pet ownership rates, or other demographic factors relevant to the business. This approach aims to give each franchisee a territory with roughly equal business potential.

Ask the franchisor to explain exactly how your territory is defined and whether the boundaries can change over time. Some agreements allow the franchisor to modify territories under certain conditions — know what those conditions are before you sign.

Questions to Ask About Territory

Before you commit to any franchise, get clear answers to these territory questions:

Is my territory exclusive? If yes, what exactly is excluded? Can the franchisor sell through e-commerce, corporate partnerships, or alternative venues in your area?

How is the territory defined? Get a map. Know the exact boundaries. If it is population-based, understand what population data is used and how often it is updated.

Can my territory be reduced? Some agreements allow the franchisor to shrink your territory under certain conditions — for example, if you do not meet performance benchmarks. Know the triggers and thresholds.

What are the performance requirements? Some exclusive territories come with minimum performance standards. If you do not hit certain revenue or customer count targets, you may lose exclusivity or the territory itself. Understand what is expected.

Can I expand my territory? If you outgrow your initial territory, can you acquire adjacent areas? What is the process, and what does it cost?

What happens with online and delivery orders? In an increasingly digital world, how does the franchisor handle customers who find the brand online but live in another franchisee's territory? This is becoming one of the most important territory questions in modern franchising.

How many territories are available in my market? Understanding the total number of territories planned for your metro area gives you a sense of how saturated the market might eventually become.

Territory in the Pet Services Industry

Territory definitions are especially important in pet services franchising because the business depends on local relationships. Pet parents choose a dog trainer, groomer, or daycare based on proximity, convenience, and trust. A well-defined territory ensures you have enough potential customers within a reasonable drive time to build a sustainable business.

The pet industry — valued at over $157 billion in the U.S. — continues to grow, which means the demand for pet services is increasing in most markets. But demand is not evenly distributed. Urban and suburban areas with high rates of pet ownership and household income tend to support pet service businesses best.

When evaluating territory for a pet service franchise, look at:

Pet ownership density. How many households in your territory own dogs? This is your addressable market.

Competition. What other pet service providers — both franchised and independent — already operate in the area? A good franchisor will help you assess the competitive landscape during the discovery process.

Drive time and accessibility. Pet parents are willing to drive a certain distance for services, but convenience matters. Make sure your territory contains customers who can easily reach your location.

Zoom Room defines territories based on market analysis and works with franchise candidates to identify areas with strong potential. To learn about available territories in your area, request information and discuss your market with the franchise development team.

Franchise Territories: How Your Market Is Defined and Protected