No, the fox would rather eat the squirrel. The territory is only relevant within the species, or with a closely related species. When they meet an individual of another species, animals either eat it, get eaten or ignore it. The squirrel is no threat to the fox but the fox is to the squirrel, so it doesn't hang around when the fox is parolling past.It might sit safely out of reach and swear at it. It doesn't eat the same food as the fox, or compete with the fox for a mate, so the fox isn't concerned about the squirrel's territory. That is the purpose of having a territory - like a farm to a human, it provides food and a home for the family.