Franchise Tutorials Franchisee

Tutorial 18: Intro to Franchise Growth Formats

If you’re a person with strong leadership skills, ambitious goals, and a dream of owning more than one business, you’ve come to the right place! Though you might not know it, franchising gives entrepreneurs like you the opportunity to grow in leaps and bounds.

How? Let’s break it all down below.

Aside from the classic single-unit franchise agreement whereby a franchisee opens and operates one location, many franchisors will reach an agreement with their motivated and go-getting partners to open multiple franchise units. Multi-unit, area development, and master franchisee agreements are all options available to you depending on the franchise you invest in.

  1. A multi-unit franchise agreement is probably the easiest one to wrap your head around. In essence, if you are a multi-unit franchisee it means you have signed multiple single-unit franchise agreements. Your various locations do not necessarily have to be in the same geographical area, and you will run all of them as you would a single-unit.
  1. In an area development agreement, you are agreeing to open a specific number of franchise units in a specific geographical area (i.e. Southern Ontario), within a specific time frame. As an area developer, you will receive exclusive rights to an assigned location by your franchisor.
  1. When you enter into a master franchisee agreement – you guessed it – you become a master franchisee! You operate similarly to a franchisor because you are granting franchises to other franchisees within your assigned territory. As a master franchisee you are responsible for opening at least one location on your own and providing some level of support to your franchisees.

What makes multi-unit, area development, and master franchisee agreements all similar, is that they give you the ability to generate revenues from multiple locations. That being said, when you invest in multiple locations, you are improving your odds of success.

What’s more, if one of your locations is underperforming, it can be offset by the success of your other locations! And although there will be a higher initial financial investment, in time, you’ll get great returns.

That’s a recipe for franchise greatness if you ask us!

The opinions or viewpoints expressed herein do not necessarily reflect those of the Canadian Franchise Association (CFA). Where materials and content were prepared by persons and/or entities other than the CFA, the said other persons and/or entities are solely responsible for their content. The information provided herein is intended only as general information that may or may not reflect the most current developments. The mention of particular companies or individuals does not represent an endorsement by the CFA. Information on legal matters should not be construed as legal advice. Although professionals may prepare these materials or be quoted in them, this information should not be used as a substitute for professional services. If legal or other professional advice is required, the services of a professional should be sought.