Exclusive territory
What it means
Exclusivity is a contractual promise, not something the Franchising Code guarantees. When a territory is genuinely exclusive, the franchisor is bound not to run its own outlet or grant another franchisee inside your boundary for the term of the agreement. This can materially protect the value of your investment.
In Australian practice, true exclusivity is less common than many buyers assume. Franchisors frequently grant a defined territory while reserving important rights, such as selling the same goods or services online, fulfilling national or corporate accounts, or supplying through other channels. The Franchising Code of Conduct 2025 requires the disclosure document to spell out whether your territory is exclusive and whether the franchisor or others may still compete within it.
The strength of an exclusive territory depends entirely on the carve-outs. An agreement can call a territory 'exclusive' yet still allow the franchisor to sell online into it, appoint the brand in a nearby shopping centre classed as a separate channel, or redraw boundaries on renewal. The wording of those exceptions is what determines how much protection you actually hold.
In practice
When exclusivity is offered, read it alongside its exceptions rather than in isolation. Identify every reserved right, including online sales, corporate accounts, alternative brands, and boundary changes, and quantify how much of your likely revenue those channels could take.
Confirm the exclusivity survives renewal and resale, and check what remedies you have if the franchisor breaches it. Because there is no statutory right to an exclusive territory in Australia, your protection is only as good as the drafting, so have it reviewed before you commit.
A real example
A bakery-cafe franchisee is granted an exclusive territory covering a 3km radius around their store, meaning no other franchisee or franchisor-owned store may open within it. However, the agreement carves out online click-and-collect and catering orders, which the franchisor fulfils centrally, so the franchisee negotiates a commission on catering delivered into their radius to offset the carve-out.
Exclusive territory, FAQs
Does the Franchising Code require exclusive territories?
No. Exclusivity is a matter of contract, not law. The Code only requires the franchisor to disclose whether your territory is exclusive and whether others can compete within it.
Can a franchisor sell online into my exclusive territory?
Often yes, if the agreement reserves online sales. Many 'exclusive' territories still allow the franchisor to fulfil online, delivery, or corporate orders in your area.
How do I know if my territory is really exclusive?
Read the exclusivity clause together with its exceptions in both the franchise agreement and disclosure document. The carve-outs, not the label, determine the real protection.
Does exclusivity continue when I renew or sell?
Only if the agreement says so. Check whether the exclusive rights survive renewal and transfer to a buyer on resale, as some systems reset boundaries at those points.
See the full franchise glossary, the Fee Index or our buyer guides.