You chose your site with the customers in that area in mind. If your franchisor opens a company-owned outlet nearby, you may end up competing for many of the same customers. That can affect your sales, especially if you expected your franchise to serve a set area.
Indiana law places limits on this type of competition. What those limits mean for you depends mainly on whether your agreement gives you an exclusive territory and where the new outlet is located.
How Indiana treats nearby company locations
If your agreement gives you an exclusive territory, Indiana law restricts your franchisor from placing its own nearly identical business inside that area. In practical terms, the company cannot reserve an area for you and then open a competing company location within those same boundaries.
The rule works differently if your contract does not give you exclusive territory rights. In that situation, Indiana law still restricts unfair competition within a reasonable area around your franchise. The statute also allows some limited exceptions, including certain temporary operations.
How your contract defines your territory
Your agreement explains whether you have territorial protection and how far that area reaches. It may describe the boundary with a map, a set distance or another geographic measure. Comparing that description with the new outlet’s address can help you see if the location falls within the area covered by your contract.
You also have to check who owns the nearby business. Indiana’s specific restriction applies to locations your franchisor owns. If another franchisee operates the site, different contract terms may control how close that location can be to yours.
Review the facts before deciding what to do
The ownership of the new outlet and its location can affect how the Indiana rules apply. You may want to keep your signed agreement and any records that show your territory or describe the new site. Those documents can help you assess a franchise contract dispute and understand what options may be available.