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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.

Sources: Federal Trade Commission: Item 12: Territory

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.”

Sources: Federal Trade Commission: Item 12: Territory

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

The Compliance Guide is May 2008 explanatory guidance. The current regulation and later official updates control current requirements and dollar amounts; state and territorial rules are separate.

The source records distinguish access dates from substantive review dates. Updating an explanation does not itself recheck the law.

16 CFR §436.5(l): FDD Item 12

Federal Trade Commission

Passage, dates and research notes

primary · Item 12: Territory

Whether the franchisor grants an exclusive territory.

Accessed: 2026-11-12T20:51:48.875978+00:00 · Meaning reviewed: 2026-11-12 · Next review target: 2026-12-12

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.

16 CFR §436.6: FDD preparation and records

Federal Trade Commission

Passage, dates and research notes

primary · section-436.6

Respond fully to each disclosure Item.

Accessed: 2026-11-12T20:51:48.875978+00:00 · Meaning reviewed: 2026-11-12 · Next review target: 2026-12-12

Current eCFR displayed through 2026-11-09; eCFR is authoritative but not the official legal edition.

Detailed rule records (1)
FDD Item 12: Territory Source checked

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.

When to check: Preparing, updating or comparing an FDD. Source review: 2026-11-12.

16 CFR §436.5(l): FDD Item 12
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