Types of Franchises

Franchising is a business model that provides a specific plan for duplicating the original concept through a licensing agreement so that each independent operation is identical to the other even though each franchise is managed by different owners. This cookie-cutter approach gives future franchisees a ready-made business with a proven roadmap to operating a profitable business just about anywhere in the world.As a result, franchising is arguably the most successful business model ever created.

There are basically four different types of franchise licensing agreements:

Single unit franchise agreement:

With a single unit franchise agreement, the franchisor will grant a franchisee a license to operate one unit in a specific location. The franchisor will protect the operator from direct competition with other franchisees within a certain radius or specific postal codes, usually within few miles.

Multi-unit franchise agreement:

A multi-unit franchise agreement allows the franchisee to open a certain number of franchise units within the protected territories or areas they select from available franchise locations. This is a great option for those that have franchise operation experience or already own a single franchise unit and want to rapidly expand their business and income potential.

Area developer / Regional developer agreement:

An Area Developer (AD) is someone in the unique position of controlling the development rights for a given area. This territory can be a major metropolitan area, an entire city, or even a whole State. The developer buys the rights to market and helps develop the territory for a Brand. By assisting with this growth, the AD can benefit financially from the initial fees and on-going monthly fees collected within the area, as well as, the territorial value appreciation as the Brand matures.

Master franchise territory agreement:

Under the umbrella of a master franchise territory agreement, the franchisee obtains exclusive rights to develop, own and operate franchise units within entire geographic regions such as metropolitan areas, counties, states or even foreign countries. The master franchise owner acts as a sub-franchisor and collects royalties for each franchise unit developed under the master franchise agreement while still maintaining all of the benefits of the original franchisor. One of the benefits of a master franchise agreement is the ability to offer either single unit or multi-unit franchise licenses for owners that will operate their franchise unit(s) under your master agreement.

Steps to Own a Franchise – Franchises For Sale

In many respects, buying a franchise is easier than buying any other type of business. This is because the franchise is required to provide you with financial and operating disclosures that other types of businesses are not required to provide. In addition, you will receive a franchise operating manual which is a step-by-step approach to achieving success without having to guess what to do next.

Our 11 Steps to Own a Franchise