As defined by the International Franchise Association, a franchise is an
agreement or license between two legally independent parties, which gives
a person or group of people the right to market a product or service using
a franchisors name and their operating techniques. Furthermore, it explicitly
obligates the franchisee to pay the franchisor for these rights and obligates
the franchisor to provide such rights and future support to franchisees.
That being said, did you know that there are different types of franchises
and franchise agreements? While the idea behind the legal relationship
between franchisors and franchisees is essentially the same, the way in
which it is executed can happen in a variety of ways; see below.
Types of Franchise Agreements:
Single unit franchises occur when the franchisor gives the franchisee the
rights to own just
one facility. Typically used for first time franchisees, this agreement is
known to be one of the most common.
Multi Unit – Multi unit agreements permit a franchisee to open one or more locations
at a time. Though it is the franchisee that owns each of the locations,
a different manager may be appointed to each to help with the day-to-day
Area Development – This type of agreement refers to the idea that a franchisee must open a
certain number of units within a specific period of time. The territory
in which locations will be opened is generally determined in advance and
similar to multi-unit agreements, the franchisee may choose to hire additional
managers to help with the different locations on a day-to-day basis.
Master Franchise – While most of the agreement is similar to that of an area developer, individuals
at this level are given the opportunity to sell franchises to other people
in a specified location. In this case, the franchisee essentially becomes
a franchisor as well since they are now responsible for their own sub
Are you interested in acquiring a franchise of your own in the near future?
As you start to connect with potential franchisors, be sure to ask them
about the different types of agreements available so that you can determine
which is the right fit for you.
For more information about the agreements and opportunities available to
bluefrog Plumbing + Drain franchise owners,contact us at 888-490-9850 today!