Great question Chris,
When I specialized in Dentists this is how I handled it.
Only one Dentist per city, except in large metros where it would be 2 per city BUT only if they were on the opposite ends of town where they would not compete for patients because a patient in S Dallas would not likely go to a Dentist in N Dallas.
But it never came up for me because I only did 3 month agreements.
But I offered the exclusive, not just for the client's peace of my, but I could not in good conscience have 2 clients competing in the same 7 pack. I personally would feel conflicted about that.
The issue of 2 in the same city never came up and I'm not sure what I would have done if it did. Guess I wanted to leave it as an option, but I'm not sure I would have taken a 2nd client in same city.
I believe Colan and Joy's company offer exclusives too. He'll probably see this and comment soon.