To preclude competition, use the word ‘exclusive’

Just as every love affair does not necessarily have a happy ending, not every franchisee will be successful.

Franchisers do not usually guarantee the returns of franchise stores, and often do not comply with their non-compete obligations. Even if a franchiser does comply with its non-compete obligations, it will, in its own economic interest, seek to increase the number of its franchisees, which may result in fierce and damaging competition. When franchisees’ revenues and profits fall or they face operational difficulties, disputes over the franchise will quickly follow.

A feature of franchising is that franchisees join a franchise system as independent owners and there is no lateral connection between them. They are independent from the franchiser and other franchisees, practise independent accounting, and enjoy and bear their profits and losses themselves. When there is intense competition between franchisees, the head office of the franchiser may often lack effective policies to address the situation.