What Are The Different Types Franchise Agreements | Franchising FAQ

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FAQ: What Are The Different Types Franchise Agreements?

Answer: Below is a list of some of the most common types of franchise agreements offered by franchisers and franchise companies in the USA.

Single Unit Franchise Agreement: This is the most common type of agreement and it gives an individual or franchisee the rights to operate single location in a defined territory.

Multi-Unit Franchise Agreement: This type of agreement allows the franchisee to open more than one location in a defined territory. Often the franchisee with multiple locations will build a management team as more locations are opened.

Area Developer Franchise Agreement: In general area development agreements offer the rights for an franchisee to open and develop a specific number of locations in a defined larger territory, and to solicit new franchisees for the Franchisor in that territory. Depending on the agreement, the area developer may have the rights to collect a portion of the franchise fee and royalty fees generated by the locations sold and opened in his or her territory

Master Franchise Agreement: In general Master franchise agreements (also known as Sub-Franchise agreements) offer the rights for an individual (Master Franchisee) or to purchase the rights to sub-franchise a franchisor’s business concept within a large specific territory, region, or state. Generally, master franchise agreements not only give the Master franchisee the rights to offer and sell individual franchises, but also the rights to collect a pre-determined percentage of the franchise fees and royalty fees generated by each unit sold and opened in its designated territory.

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