Franchise business online - territorial encroachment?

[JezgMBA]

Hi

My name is Jeremy and I am an MBA student with the University of Liverpool.

My dissertation is investigating the evolution of the Internet in franchise business and the issue of territorial encroachment, specifically in the area of direct sales conducted online by franchisor companies. As you will no doubt be aware, the growth of e-commerce and the use of websites by franchise businesses to engage in direct sales has the potential to encroach onto a number of legal and professional ethical issues, not least violation of territorial exclusivity granted by franchisors to franchisees and a breach of the trust that exists between the two. This clearly can create conflict within the franchise network and in some cases has in fact lead to lawsuits being brought against franchisors by franchisees who feel they are competing with their own brand and with the very people they are paying royalties to for the operation of the business format. The majority of business is a success story of course. Franchisors that pay reverse royalties or allocate business to a franchisee have tackled things ethically and legally, which thankfully seems to be the norm.

It would be of great help to me if any franchisees reading this could offer me some opinions, examples, insights or thoughts on this issue as active business people operating in the industry.

Time is not my friend here unfortunately, even brief thoughts would be appreciated as I am working to a deadline. Thank you so much in advance.

[Glaucus]

My head office operates a national website which is, obviously, open to all. Any sales within my postcodes are credited to my franchise.

[JezgMBA]

Originally Posted by Glaucus

My head office operates a national website which is, obviously, open to all. Any sales within my postcodes are credited to my franchise.

Thanks Glaucus. This seems to be the most common way of handling the allocation of sales made through a central website. Are you happy with this arrangement? I don't know what business your particular franchise is involved in, but assume that building a face-to-face relationship with customers is an important aspect of repeat business for you. Do you think enough efforts are made to direct business to the franchisee rather than just allocating a fixed royalty to them?

Thanks