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Level up to multi-unit franchising

On Behalf of | Aug 9, 2023 | Blog, Franchise Law |

If you have been in the franchising business for a significant amount of time, you have probably heard of multi-unit franchising. Congratulations if you are thinking of taking the major step into operating multiple businesses.

You are definitely not alone in making this move. In fact, recent numbers indicate that multi-unit owners have well over 50% of the total franchise units in the country. You might find this introduction informative as you make your decision.

Two major multi-unit models

One of the most important decisions you will probably make is the exact type of multi-unit franchisee you wish to be. There are many variations, but two of the most popular industry standards are the master franchising and the area development models. Both typically control an area, but there are significant differences.

In master franchising, you would be working as something similar to a sub-franchisor. You could be responsible for making franchise agreements with third parties — usually after you successfully operate some pilot locations yourself.

In the area development model, you typically do not have the power to issue new franchise agreements. However, you usually do have exclusive rights to operate franchises within your territory.

Aligning your expectations with the reality of your agreement

Beyond these simple divisions, there are many subtle changes that franchisors could make to a multi-unit contract that could limit your freedom, affect the profitability of your venture or saddle you with responsibilities that you do not want. The good news is that, as a multi-unit franchisee, you typically have a much better bargaining position than you would as a single-franchise owner.

Do not let unanswered questions delay your actions or threaten your future success. Zarco Einhorn & Salkowski, P.A., offers free consultations — schedule one now.