Franchise Encroachment

Franchise encroachment occurs when a franchisor opens a new location (or authorizes a new franchisee to open one) in close proximity to an existing franchisee's territory, potentially cannibalizing their sales. Encroachment is one of the most common and contentious disputes in franchising, especially for brands with non-exclusive territories. The legal recourse available to franchisees depends on the specific territory protections outlined in their franchise agreement. Some states have enacted anti-encroachment laws, and franchisee associations often lobby for stronger territorial protections. Digital encroachment (a franchisor's e-commerce or delivery operations competing with a franchisee's local market) is an emerging concern.