It is very important to understand the ramifications and clarify any questions that you, as a franchise buyer have with regards to the exclusive territory of the franchised outlet prior to purchase. It is also very important to understand that you may be competing against the franchisors website as they sell goods or services online, which you are actually selling in your store.

You need to know if you are getting a commission for the buyers that buy from the Franchisor's website from your zip code. After all, you are increasing the brand name in your local region, and then people are going online and buying directly from the franchisor, which cuts you out of the pattern.

There are many franchise disclosure documents that say that the franchisor will be selling online, but the franchise buyer does not consider this to be competition; sure it is and it very much matters. If your franchisor will be competing against you online and you are not getting a commission for helping them with at least the buyers that come from your zip code, then I'd recommend not purchasing that franchise, and perhaps going with a different brand.

As a former franchisor we dealt with this back in 1996 when online sales were starting to really pick up, and we realized right away that we would be cannibalizing our own franchisees if we continued to sell online without giving them a commission.

We therefore modified in our uniform franchise offering circulars at the time to reduce their royalty payments by the amount of that commission from any sale resulting from a customer within their zip code. It's the right thing to do and it is the only fair way to do it. Make sure your franchisor cares about you and is not becoming your competition. Please consider all this.