There are several types of franchise agreements, which can vary especially as the number of franchise units grows beyond single-unit ownership. Here, we outline four franchise models: single-unit franchising, area development, multi-unit franchising, and master franchising.
Single-unit ownership
Is a model in which a franchisee invests in one unit with no expectation of opening additional locations.
Area development
Is a type of franchise agreement in which the franchisee commits to opening a certain number of franchise units in any given geographic area throughout the contract timeframe. The franchisee must pay the initial fees, along with a franchise fee for each additional unit they open.
Multi-unit franchisees
Typically start as single-unit franchise owners and gradually add units to their portfolio.
Master franchising
Allows prospective owners to develop the brand name in a specific region. The master franchisee takes on the role of the franchisor in that region by recruiting franchisees and providing training and additional ongoing support.