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Learn how to avoid territorial conflicts in Franchising
Text by Francis Glenn Yu
Mar 07, 2011
1. As a general rule, franchisers should plan their expansion programs well.
This will prevent disputes among dealers and problems arising from sales cannibalization, like unmet sales projections, will be avoided.
2. In determining the right distance between two stores, it is advisable to study how potential clients behave within a proposed trading area.
One store should not be located in an area where clients of the other store roam freely.
3. Potential franchisees should take advantage of the resources provided by the franchisor in determining the optimal location of a store.
Most franchisors, including SEAOIL, provide potential dealers access to its extensive feasibility and market-planning support.
4. Franchisees should study the contract carefully, specifically with regard to the legal details on geographical rights regarding the business.
The contract should explain contingencies that may arise as well as territorial negotiations that may be permitted.
Editor's note: Francis Glenn Yu is the president and CEO of SEAOIL, the country's leading independent fuel company in terms of retail presence. It currently has more than 170 stations nationwide. It's fast growth since the conmpany's inception in 1996 is attributed to its franchise model that has earned the company various recognitions, including Hall of Fame Award for being an Outstanding Filipino Franchise for two consecutive years in the Franchise Excellence Awards organized by the Philippine Franchise Association, the Department of Trade and Industry, and the Philippine Chamber of Commerce and Industry.
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