Many people are un-aware that there are several different types of franchising. Depending on which one you are looking at, there can be different opportunities out there for you. There is no doubt that it is one of the most exciting times when you decide that you are going to go out on a limb and own a piece of a franchise. On the other side of things, it can be pretty exciting when you have others interested in buying the blue print that has made your company so successful. Whichever side that you land on, it can help a lot to know the different types of franchising options that there are.
One of the most common franchises that you are going to see is a single unit one. Basically what this means is that you will be buying a single unit and using it as your part of the franchise directly from the company that you are branching out of. Often times you will notice that certain companies will begin to designate territories, depending on what type of business it is. Before you get this choice though, you are going to want to make sure you are knowledgeable on the subject matter that the business is about.
Most companies and franchises will make this a requirement before they let you own a single unit. A multi-unit scenario is another type of franchise, and this happens when the franchisee is allowed to have multiple units that will all have the same company represented among them. You will notice that some companies are willing to offer discounts on certain fees when you are going for the multi-unit system. Almost every single unit owner is going to be offered the chance to move up to a multi-unit, but each person will have to decide if that is going to be right for them.
Area development is the next level up, when you decide that you are going to take it up a notch. Both the franchisee and the franchiser take things a bit more seriously here though. Often times you will have a mark that you have to meet in order to maintain this business relationship as far as how many units you have put up in a certain territory. The franchiser will expect you to meet this demand and if you can’t, you may be subject to fines in retaliation.
The master agreement is one that everyone seeks, but is hard to get. It is basically exactly like the area development, plus a few more breaks on fees and licenses. But, in this case there is also another bonus. The franchisee in this case gains the ability to sell to other franchisees on the company’s behalf. This means that you can essentially switch roles while still maintaining the franchisee status. Like I said before though, this is one of the least common ones as it is extremely rare. You have to have a lot of trust between the franchisee and the franchiser.