The benefits and responsibilities of single-unit franchise management may lead to expansion within the franchise industry. Opening additional franchise locations can involve multi-unit franchise ownership or area development, both of which have unique benefits for business owners.
Multi-unit franchise ownership allows for the flexibility of opening locations in different cities or states depending on the franchisee’s business aim. Owners commonly offer support through managerial responsibilities such as hiring support for each store and overseeing each location on a weekly or monthly basis depending on the arrangement involved.
Multi-unit franchises may be opened with a series of different contracts over time, whereas area development is an all-inclusive agreement made between the franchisor and area developer involving a specific area and number of franchise locations. Overall, multi-unit franchise operation involves a greater degree of responsibility on a case by case basis when each additional location is opened, while area development agreements involve a broader level of oversight for the opening and selling of developing franchise locations covering a regional area.
Area development involves a geographically fixed presence in which a number of franchise locations are opened in a specific region. This franchise arrangement involves an agreement between the franchisor and area developer outlining how many locations will open and when, where they will be located, and specifies the responsibilities associated with setting up and selling each franchise.
The area developer benefits from an experienced background in franchise ownership and must manage various responsibilities in a supervisory capacity while establishing new locations in the specified region.
Through opening various locations and eventually selling them to potential franchisees; area developers are usually compensated with sales commission and benefit from decreased fee and royalty obligations to the franchisor.
Additionally, other franchisees are not permitted to open locations in the same region as specified in the agreement, so area developers hold exclusive rights to develop within their franchise. Franchisor usually offers a number of assistance measures to benefit the overall success of each franchise location.
This may include support with marketing needs, assistance deciding on the most advantageous location for each franchise, and assisting each franchise with staffing and networking.