Franchising in Italy: how to check territorial exclusivity

Joining a franchise network means sharing a brand and an operating model, but it does not necessarily give you an exclusive territory. Before investing in premises, you need to understand which activities the contract protects, against whom and for how long. A promise of ‘exclusivity in the city’ is not enough: you need verifiable boundaries, rules for the different sales channels and clear consequences if those rules are breached.

1. Distinguish promised exclusivity from contractual exclusivity

In Italy, franchising is governed by Law No. 129 of 6 May 2004. Article 3 requires the contract to be in writing, failing which it is void. It also requires the scope of any territorial exclusivity to be expressly stated, both in relation to other franchisees and to sales channels and outlets operated directly by the franchisor.

The crucial word is any: the law does not automatically grant an exclusive territory to anyone joining a franchise network. Protection depends on what is agreed.

Article 4 also requires the franchisor to provide a complete copy of the contract, together with the attachments required by law, at least thirty days before signing. Use this period to compare sales claims with the actual wording, rather than leaving your review until the last minute.

Ask the following questions:

• Does the franchisor undertake not to open company-owned outlets in the area?
• Does the restriction also cover new outlets opened by other franchisees?
• Are there exceptions for shopping centres, stations, airports or temporary outlets?
• Does the protection cover all the brand’s activities or only certain services?

If a guarantee appears only in the sales presentation, ask for it to be included in the contract or in an attachment expressly referred to in the contract.

2. Turn the territory into a verifiable map

Phrases such as ‘central area’, ‘designated area’ or ‘catchment area’ may describe a commercial objective without granting a genuine right to exclusivity. The contract must allow you to establish precisely where the protection begins and ends.

Look for a signed map attached to the contract, supported by identifiable boundaries: municipal boundaries, streets, building numbers or other unambiguous reference points. If the territory is defined by a radius in kilometres, the starting point and method of measuring the distance must be specified.

Also check what happens if you relocate the premises. Does exclusivity follow the franchisee, remain tied to the original location or require renegotiation? Relocation is a separate issue from defining the territory and needs to be addressed consistently across the relevant contractual clauses.

For your preliminary checks, ask for an overview of the brand’s existing outlets in the area and clarification of any planned openings. Distinguish between the information about the network that must be disclosed by law and the additional information you request to assess the investment.

Finally, visit the area. A territory that looks large on a map may contain few accessible customers, road barriers or shopping hubs excluded from protection. Exclusivity limits certain forms of competition within the network; it does not guarantee sufficient demand or profitability.

3. Check online sales, deliveries and shared customers

Protection against new outlets does not necessarily address sales through other channels. The brand’s website might accept orders from residents in your territory, while another franchisee might serve customers who approach it of their own accord.

Create a table with four columns: sales channel, seller, recipient of the revenue and party bearing the service costs. Include at least:

• purchases through the franchisor’s website;
• home deliveries;
• online bookings and requests for quotations;
• in-store collection of orders paid for elsewhere;
• contracts with national or multi-site customers.

For example, if you handle collections and returns for online purchases, ask whether you will receive a fee and who bears the operating costs. If the brand distributes sales leads, check how they are allocated and how overlapping claims are resolved.

Do not assume, however, that every restriction on selling outside your territory is valid. Territorial clauses must also comply with competition rules, including Regulation (EU) 2022/720 on vertical agreements. The distinction between active and passive sales, and the rules on online sales, require specialist assessment: exclusivity does not mean complete separation of each franchisee’s customer base.

4. Assess duration, conditions and remedies before paying

A territory may initially be reserved for you but later shrink if certain conditions arise. Look for clauses linked to minimum turnover, opening deadlines, local campaigns or further investment.

Check that targets are measurable and that the assessment period, required notices and any time allowed to remedy a shortfall are clear. Have a lawyer assess any right the franchisor has to change the territory unilaterally.

Then work with your accountant to check whether the business remains viable under the least favourable conditions permitted by the contract: online sales not credited to the local outlet, territorial exceptions or loss of protection. Factor in rent, staff, financing and any fees or contributions still payable in that scenario.

Finally, ask what remedies are available if exclusivity is breached. Do not assume you will be entitled to refunds or to suspend payments: the procedures for raising a dispute and the possible consequences need to be examined before signing.

In practice: before paying anything to ‘secure the territory’, obtain the map, the exclusivity clause and the rules governing digital channels. Have these documents reviewed together: the territory’s value depends on written commitments, not simply on its size.