There are four basic franchise arrangements. Like the different levels of franchise ownership, each of the four franchise arrangements comes with unique responsibilities, resource requirements, and various degrees of commitment.
Single-Unit Franchise – This arrangement grants the franchisee the right to operate a single unit and is ideal for first-timers. You’ll have one franchise to devote your time and resources to.
Multi-Unit Franchise – This is like a single unit, except that you will have several franchises to work with. Some people start with one franchise and transition to multiple units. If you have a little more experience, this may be a path you go down in the franchising world.
Area Development – The franchisee has the right to open multiple units, but there’s more to it than that. The most significant difference here is that the franchisor gives you exclusive rights to a particular region, preventing other franchisees from opening up locations in your area.
Master Franchise – This arrangement requires you to have more capital, time commitment, and extensive experience running a business. In addition to having the rights granted in the area-development franchise agreement, you’re given the right to act as a franchisor, with the ability to sell franchise locations and make decisions on behalf of the franchisor.
If you’re new to franchising, a single-unit franchise agreement is an ideal place to start. It allows you to buy a franchise for less capital (the cost of a single unit), and it lets you choose how involved you want to be with the day-to-day operations of the business.
A multi-unit franchise arrangement is better suited to someone who has more start-up capital at their disposal, experience operating a franchise, and the skill set of a business entrepreneur.
Area development is similar to the multi-unit arrangement, but some differences make it more of a challenge. Money, experience, and commitment are determining factors as to whether or not this arrangement is suitable for you.
A master franchise arrangement entails all of the above and the ability to demonstrate to a franchisor that you can act on their behalf. Besides having the financial means, you will need to be fully committed to the brand and be prepared to take on the role of the franchisor.
VF Franchise Consulting is a uniquely experienced franchise consultancy (brokerage) with extensive franchise sales, marketing, and operations experience throughout Southeast (South East) and Asia Pacific. Our senior management team has over four decades of international experience in the USA, Asia, and Australia. We specialize in franchise sales and marketing, franchise brokering and operations, strategic business planning, general business development, franchise operations, training, commercial real estate, and project management.
VF Franchise Consulting also offers assistance in establishing Distribution partnerships, Joint Venture (JV) partnerships and Direct Investments for international organizations that wish to enter Southeast (South East) and Asia Pacific.