When we talk about getting a franchise, we talk about TERRITORIAL PROTECTION but what is it really and does it mean anything nowadays?Territorial Protection is when the franchisor supposedly guarantees that they will not locate a similar franchisee near your site. In most cases, the franchisor does honor this but does it really mean anything when negotiating with a Mall Leasing Manager for space?
A more important Protection is Zoning Protection of the Mall, to wit:
1. At the SM annex basement, Mister Donut, Pianini (breads), a coffee shop and a waffle stall are all selling coffee and yet they are all within 5 steps of each other.
2. At the Ayala MRT station, the Siomai House (Number 1 siomai kiosk) and the Master Siomai (Number 2, maybe) are practically opposite each other.
3. In a Manila mall, Milko Ice cream (retail P12/cone) used to be the only ice cream dealer has now Mang Inasal BBQ chicken selling Pinoy Ice Cream at P10. That does not include the times when Selecta Ice Cream would promote their Ice Cream brand at P5/cone.
(Milko said that their sales has gone down by about 50% and they are the longest staying ice cream kiosk).
4. Sometimes having the best tasting, best quality, most unique flavors and best of everything is still not enough to do battle with the cheapest. An example is Gonuts Donuts (premium, expensive) versus Dunkin Donuts at P10/P12 a donut.
5. Don't worry so much about territorial protection as much as you should about what I call Zoning Protection!!!!
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