Business Ownership
Franchise Success Starts with Protected Territories
Learn How Franchise Succes Starts With Protected Territories
Stefan Figley
Oct 9, 2025
Article Featured in Franchising Magazine
For entrepreneurs considering franchise ownership, the decision extends far beyond choosing a recognizable brand. An important, often-overlooked consideration is whether the franchisor can offer territorial protection. This critical safeguard can determine the difference between a thriving local business and one that constantly struggles against internal competition.
Territorial protection means that franchise owners are granted rights to operate under their brand within a designated geographic area, often a particular zip code. When territorial protection is enforced, no other franchise owner from the same brand is allowed to open a competing location in that territory, barring rare and very specific exceptions.
For potential franchise owners, this safeguard is a good sign that they will have room to grow, and that their investment in the franchise will be adequately protected.
While many franchise systems promise territorial protection, that doesn’t always mean they uphold it. For aspiring entrepreneurs, it’s important to carefully vet potential franchise systems, verifying that they will make good on their pledge to minimize internal competition.
How protected territory gives owners an edge
Without territorial protection, two or more owners from the same system could open in the same geographic space. These franchise owners will likely end up competing over the same pool of customers.
With territorial protection, franchise owners can avoid this conflict altogether. Each owner knows their territory is secure, allowing them to focus on serving customers, building community trust and maximizing profits.
When territorial protection is properly enforced, owners can confidently collaborate and share best practices with owners in a neighboring region without the fear of losing customers to another owner representing the same brand.
The risks of inadequate territorial protection
Meanwhile, when territorial protection isn’t upheld — or when it isn’t offered at all — it’s often to the detriment of individual franchise owners.
The most obvious danger is direct competition against another location from the same brand. Customers typically have no loyalty to which particular branch they patronize. They simply go to the closest or most convenient option. If another location opens nearby, a franchise owner may find that their customer base shrinks overnight, leaving them with steady operating costs but declining revenue.
Another issue is that franchisors may view a strong market as an opportunity to increase their own revenue, approving multiple locations in the same area. While this strategy may boost short-term royalties for the franchisor, it leaves local owners battling each other for the same customers.
System support meets territorial boundaries
Territorial protection alone is valuable, but when paired with strong franchisor support, it becomes a foundation for lasting success.
Marketing, training and operational resources provided by the franchisor are far more effective when owners aren’t distracted by competing against nearby locations of the same brand. In fact, territorial protection helps to amplify system-level support.
A dedicated marketing campaign, for example, has greater impact when its reach isn’t diluted by multiple franchisees in the same area. Likewise, training and operational guidance help owners maximize their performance without worrying that a neighboring franchisee will be benefiting from the same playbook at their expense.
Territorial protection ensures that the franchisor’s support directly benefits the territory in question, strengthening both the local business and the brand as a whole.
Fostering confidence and trust
Territorial protection also fosters confidence.
When local owners know they are the only representative of their brand in a region, they are more willing to invest in long-term strategies, whether that means opening additional units, increasing local advertising or cultivating community partnerships.
This security helps to enhance trust between the franchisor and the local owner. Owners feel assured that the franchisor is truly invested in their success, not just in the short-term expansion of the system. This level of trust creates healthier, more stable franchise relationships and encourages owners to invest more in their territories over time.
Assessing territorial protections
Again, it’s important for aspiring owners to recognize that, while most franchise systems pledge some level of territorial protection, not all of them enforce it with consistency.
When evaluating potential franchise opportunities, prospective owners should make territorial safeguards one of their top considerations. It’s not enough to assume protections exist; due diligence is required.
Some guidelines include:
- Ask how the protection is defined.
- Ask if there have been any violations.
- Talk with other owners.
For prospective franchise owners, territorial protection isn’t just a contractual detail. It’s a strategic safeguard. It protects against cannibalization, reduces unnecessary competition and ensures franchisor support delivers maximum impact. As such, it’s something worth carefully vetting when sizing up any potential franchise opportunity.
Stefan Figley is president of 1-800-Packouts, a leader in the contents and personal property restoration franchise industry since 2016 and part of the Five Star Franchising platform of home service brands. Figley has nearly 30 years of experience in the franchise and marketing industries, with a focus on brand growth. He has held executive and leadership positions with nationally recognized companies such as Terminix, Steamatic, Merry Maids and Jani-King International, as well as prominent international roles in the marketing industry.
