Territorial and Customer Restrictions in Franchise Agreements Under the Antitrust Laws

The growth of franchising as a marketing vehicle in the past decade has been apparent to the American consumer. Several factors have contributed to this growth. This kind of distribution system can be achieved with less capital outlay and in a shorter time span than most other distribution systems require. Some products and services gain greater consumer acceptance if they stand alone in the market place than when they are co-mingled with other products. Wholesalers in certain product lines, such as food and drugs, have found it necessary to form voluntary chains based upon franchise agreements to meet the competition of the big chains. Franchising, particularly in the service field, enables a product or institution to achieve an identity upon which a reputation for quality can be built. These are a few of the reasons for the widespread use of franchising