Answer

Exclusivity is always a major concern of potential master franchisees. From the master franchisee's point of view, exclusivity is often seen as a form of "guarantee" that they will be given a fair chance at making the business work, without the franchisor personally competing with them, or putting in another franchisee.

However, it is not always possible under Middle Eastern laws to grant a master franchisee fully exclusive rights. Thus, before agreeing to any exclusivity you must take informed legal advice as to whether or not is legally possible.

It is also important to note that the granting of exclusivity to franchisees can cause problems for franchisors in the future. This is particularly so for newly established franchises which are offering a new product or service. In order to make the business survive in the early days, a large geographical exclusive territory is granted. However, as market penetration increases and the product or service becomes well known and increases demand, such a large geographical territory can be far too much for one franchisee to explore fully. If the area is exclusive, then there is little that the franchisor can do to deal with this under-exploitation. In the past, franchisors have had to pay large sums of money to "buy back" parts of exclusive territories. On the other hand, unscrupulous franchisors have, on occasions, undertaken programmes of "encrouchment" or "infilling". By this I mean establishing their own corporate outlets within the catchment area of franchisees which do not have an exclusive territory.

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