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Read the rights behind the boundary
Item 12 covers location and territory, exclusivity and its conditions, relocation or additional rights, reserved channels and relevant competing operations. Read what protection is offered, what the brand retains and what conditions keep the right in place.
A private territory arrangement does not stop every unrelated competitor from trading nearby.
A national customer can cross the local area
Suppose a Dutch business-services brand keeps a national customer with sites inside its U.S. operator’s territory. Establish who may sell to that customer, who must serve the sites and who invoices or receives the revenue.
Make the Item 12 explanation, agreement and operating instructions describe the same allocation. Do not rely on a verbal assurance that “the territory is protected.”
Scope
- This explains the selected federal disclosure item. State and territorial requirements and the terms of the particular offer remain separate.
Next step
Resolve retained accounts and channels before setting the territory promise or estimating the operator’s revenue.
Sources & review notes
Federal Franchise Rule
FTC overview · Compliance Guide · Guide PDF · Current regulation
Federal Trade Commission
Passage, dates and research notes
primary · Item 12: Territory
Whether the franchisor grants an exclusive territory.
Current substantive item read in full from current eCFR. This guide explains selected management implications; it is not a substitute for all prescribed disclosure text.
Federal Trade Commission
Passage, dates and research notes
primary · section-436.6
Respond fully to each disclosure Item.
Current eCFR displayed through 2026-11-09; eCFR is authoritative but not the official legal edition.
Detailed rule records (1)
Item 12 covers location and territory, exclusivity and conditions, relocation or additional rights, reserved channels and relevant competing operations. Territorial rights do not protect the operator from every independent competitor. B2B national-account rules require particular clarity.
16 CFR §436.5(l): FDD Item 12Keep this reading in your learning library.
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