The most common type of franchise is the single unit franchise. A single unit franchise is an agreement under which the franchisor grants a franchisee the right to open and operate one franchise location. A multi-unit franchise, on the other hand, is an agreement whereby the franchisor grants a franchisee the right to open and operate more than one franchise location within a specified area and timeframe. Under the multi-unit franchise model, franchisors can offer two types of agreements: an area development agreement and an area representative agreement. Area development agreements grant the franchisee the right to open a certain number of franchise units in a specified territory according to a predetermined timetable. Area representatives, on the other hand, have the right to open and operate multiple franchise units within their territory, as well as the right to sell franchises to third parties within their territory. As such, area representatives are in essence sub-franchisors within their territory and thus take on many responsibilities and benefits that the franchisor would otherwise have.
The EPGD team assists franchisors in developing and structuring their multi-unit franchise offerings. In addition, we represent multi-unit franchisees in negotiating their rights and obligations with their franchisors, including acquisitions of additional units or brands. Please contact us for a consultation regarding your multi-unit franchise.