I have written in the past about Iowa Franchise Law and Territorial Encroachment.  Franchisees generally want an exclusive territory that is protected from encroachment by other franchisees or the franchisor’s company owned stores.  But have you considered the impact of Internet retailing by the franchisor or other franchisees?

Be sure to review the territory provisions in the franchise disclosure document and franchise agreement with an eye toward whether the franchisor or franchisees are able to conduct Internet retailing.  In many instances franchisors will have a Web site but franchisees are not permitted to conduct online retailing.  While I am a big believer in the Internet for marketing and sales you will possibly suffer the consequences if a franchisor has a strong Internet sales presence.  Do you really have an exclusive territory if the franchisor conducts sales online?

Franchisors must also balance the possibilities of territorial enforcement with the need of franchisees to conduct online retailing.  This is where local search marketing comes into play.  Are there opportunities for franchisees to compete fairly online without cannibalizing each other? 

There are no easy answers when it comes to franchise Internet retailing but it should be a part of your decision making process in determining whether to buy a franchise.

Photo on flickr by aranarth