Inside Item 12 of the Pilar Coffee Bar FDD – Territory
Item 12 of the Franchise Disclosure Document (FDD) is where franchise buyers discover the boundaries of their business, literally. It defines where you can operate, who else can compete near you, and what rights (if any) you have to protect your market. Let’s dive into how Pilar Coffee Bar handles territory in their 2025 FDD and what that means for prospective franchisees.
📚 Understanding Item 12
Item 12, titled Territory, outlines the geographic scope within which a franchisee may operate their business. It typically includes:
The physical boundaries of your territory
Whether or not your territory is exclusive
Conditions under which you can relocate
The franchisor’s reserved rights to compete within or near your area
Franchise buyers often overlook this section in favor of flashier items like fees, support, or financial performance. But Item 12 is critical. It defines your freedom to operate without internal competition and your ability to grow within the brand.
📄 What Pilar Discloses
Let’s break down Pilar Coffee Bar’s Item 12 into plain terms:
1. You get a “Designated Territory,” but not an exclusive one.
Pilar will assign you a “Designated Territory” when you sign the Franchise Agreement.
That territory may be defined by zip codes, streets, landmarks, or county lines.
However, you do not receive exclusive rights. In fact, Pilar reserves broad rights to:
Sell through other channels (like online or in grocery stores)
Open competing units in non-traditional venues (airports, hospitals, stadiums, etc.)
License other brands selling similar products, even within your territory
Permit delivery from other franchisees into your area via platforms like Uber Eats
2. They can relocate you, but it’s their call.
You can’t move your location without Pilar’s written consent.
Approval is based on current site criteria, nearby franchise plans, demographics, traffic, and more.
They promise not to “unreasonably withhold” approval, but the interpretation of that is up to them.
3. No growth rights, no first refusal.
Franchisees have no right of first refusal or option to open another unit.
Each new location requires a separate agreement, no multi-unit perks unless negotiated separately.
4. Their rights outweigh yours.
Pilar and its affiliates can:
Sell approved products via any other method, including mobile carts, food trucks, and the Internet
Launch copycat brands selling similar items under different names, even inside your territory
Operate directly or license others at non-traditional sites
Keep all revenue from these activities, with no obligation to compensate you
This isn’t just theoretical. The same individuals behind Pilar Coffee Bar; Steve Giordanella, Carlos “Max” Gonzalez, and Delia Valles; also control I Heart Mac & Cheese, a brand that has repeatedly been accused of undercutting its own franchisees. That brand has sold nearly identical products through Circle K gas stations and QVC, leaving franchisees to compete with their own franchisor. The handful of franchisees left anyway.
When franchisors retain the right to monetize your territory through alternative brands, platforms, or venues, and have a history of doing exactly that, franchisees need to proceed with caution. At a minimum, Pilar Coffee franchisees should demand clear, written disclosure about whether similar strategies are in the works here.
🚩 Why It Matters
This is one of the most franchisor-friendly Item 12 disclosures we’ve seen, tilted heavily in favor of corporate control:
No exclusivity means you could spend money building local awareness only to face competition from a stadium kiosk, ghost kitchen, or another franchisee’s DoorDash orders.
No growth rights lock you out of natural expansion, especially risky in smaller towns where one location may not be enough to sustain the business.
No compensation even if corporate profits from customers in your backyard.
Franchisees risk investing in a brand where they may have limited control over their market, no guaranteed breathing room, and little protection from being undercut by corporate’s own sales channels.
🔎 Real Due Diligence Tips
Thinking about signing a Pilar Coffee Bar franchise? Ask these questions first:
Get it in writing. Ask for a copy of your proposed Designated Territory before you sign. How big is it? How is it drawn? Are the boundaries defensible?
Clarify “non-traditional” impact. Could a Pilar kiosk inside your local hospital cannibalize your sales? What if a ghost kitchen starts delivering nearby?
Ask about delivery zones. Do franchisees have delivery boundaries, or is it free-for-all? Who owns the customer relationship?
Talk to existing franchisees. Have they lost business to other franchisees or corporate channels? How responsive is Pilar to territory complaints?
Negotiate territory protections. If you’re in a small or dense market, request a limited radius of protection, or a first right to open additional units nearby.
✅ The Bottom Line
Pilar Coffee Bar’s Item 12 may offer territory, but it doesn’t offer protection. Between reserved rights, lack of exclusivity, and the threat of internal competition, franchisees are left holding the risk without meaningful safeguards.
Territory isn’t just about geography, it’s about viability. When a franchisor has more rights to your market than you do, it’s worth asking whether the business you’re building is really yours to grow.
This report is based on publicly available documents, court filings, and the franchisor’s Franchise Disclosure Document (FDD) as filed with the State of Illinois. Interpretations, observations, and conclusions drawn herein represent the informed opinions of Franchise Reality Check™and are intended to encourage deeper due diligence by prospective franchisees. This content should not be construed as legal, financial, or investment advice. Prospective investors should consult with a qualified franchise attorney and CPA before making any franchise purchase decisions.
