Territorial protection
Can the brand open another hotel next to mine?
Also called: Area of protection · Restricted area · Encroachment
Favours the drafting party
What it does
Restricts the brand from licensing another hotel — usually of the same brand only — inside a described radius or boundary for a stated time.
Why it matters
This is the provision owners are most likely to believe they have and least likely to have read. A protection limited to a single flag may not restrict much of what an owner was actually worried about, and many state no remedy at all if breached.
What to watch for
- Coverage of the same brand only, not the parent company's other brands
- Carve-outs for pipeline hotels, conversions, and properties acquired in a portfolio transaction
- Venue exceptions — airports, convention centres, casinos, stadiums, universities
- A duration shorter than the term, or one conditional on hitting performance thresholds
- No stated remedy, leaving you to prove general contract damages
What to ask for
- Extension to defined sister brands, or at least to brands in the same chain scale
- A stated remedy — fee abatement, a right to terminate without liquidated damages, or a fixed payment
- Protection running for the full term rather than a shorter fixed period
- Written disclosure of what is already approved or under application in the submarket
How common is it
Documents filed with the SEC containing the exact phrase “area of protection”.
View as a table
| Year | Documents |
|---|---|
| 2019 | 17 |
| 2020 | 11 |
| 2021 | 9 |
| 2022 | 10 |
| 2023 | 5 |
| 2024 | 6 |
| 2025 | 8 |
Real filings using it
- CHEMICAL & MINING CO OF CHILE INC (SQM) (CIK 0000909037) — 20-F, 2023-04-26
- Performant Financial Corp (PFMT) (CIK 0001550695) — 10-Q, 2023-05-10
- Performant Financial Corp (PFMT) (CIK 0001550695) — 10-Q, 2024-11-07
Source: SEC EDGAR full-text search (efts.sec.gov). Retrieved 2026-08-30. Counts are filed documents matching an exact phrase, not deals, and EDGAR indexes public-company filings — read these as public-company practice, not as evidence of what private mid-market agreements contain.
What usually gets agreed
A remedy of some kind is more readily agreed than a wider area. Fee abatement for a defined period is the most common concession; termination without damages is rare but is the one worth asking for.
Related
- Transfer and consent — The brand's right to approve a sale, and everything it can require in exchange.