Encroachment

Encroachment in franchising refers to a situation where a new franchise unit or corporate location is established too close to an existing franchisee’s territory, potentially reducing their market share or sales. This can occur unintentionally or as part of aggressive growth strategies. Franchise agreements may or may not protect against encroachment, depending on whether exclusive territory rights are granted. Understanding the franchisor’s territory policies and how they define proximity is critical for long-term operational stability and return on investment.