It all depends on the franchise agreement, but bear in mind that by no means all franchises grant franchisees exclusive rights. Generally, if the franchise operates from retail premises you would not expect an exclusive territory. The reason for this is that it is very difficult to predict the success of a retail operation and therefore to accurately calculate territories. Further, of course, customers come from potentially anywhere to retail premises, so any exclusivity would relate to other retail outlets and not to customers.
Whilst only 70% or so of franchise agreements grant exclusivity. Sometimes exclusivity relates to where customers are situated so that, for instance, the franchisor agrees that no other franchisee will be entitled to sell to customers in a specific territory – this works for a “man and a van” type franchise but as indicated above does not work for a retail franchise. What all of this means is that you have to look very carefully at precisely what exclusivity you are being granted – and indeed whether you are being granted any exclusivity. In many franchises franchisees are granted a territory but only for the purposes of limiting the franchisee’s marketing activities to that territory. In other franchises the franchisor grants a sole territory which, unlike exclusive territories, does not preclude the franchisor from competing in the territory.
The permutations are huge so do not assume that you have an exclusive territory and obtain expert legal advice.