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Understand the 4 Different Types of Franchise Arrangements (and which one is a Hidden Gem!)

Learn the 4 main types of franchise arrangements: single unit, multi unit, area developer and master franchise.

The franchising industry is very versatile, with multiple franchises, industry options and investment ranges. In addition, there is a diversity of types of franchise arrangements available. Learning what they are is important so you can work with your Franchise Consultant on a game plan for your future!

Here are the 4 Types of Arrangements:

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A single unit franchise is an agreement in which the franchisor grants the franchisee the rights to open and operate one franchise unit.

This is the simplest and most common type of franchise, and many new franchisees start this way, in order to “get their feet wet”. Many times, after the franchisee opened his single-unit and is prospering, he may negotiate with the Franchisor the possibility of opening other units over time.


A multi-unit franchise is an agreement where the franchisor grants a franchisee the rights to open and operate more than one unit. Typically there will be a schedule determined during which the franchisee will be expected to open the units.


As an area developer, a franchisee has the right to open more than one unit during a specific time, within a specified area. As compared to the Multi-Unit agreement, in the Area development agreement, the franchisor grants the franchisee exclusive rights for the development of that territory. For example, a franchisee may agree to open 5 units over a five year period in a specified territory. That territory is restricted to that franchisee, and no one else can open units in the territory during the contract term.


So, as we said in the title, we would tell you what the “hidden gem” is in the franchising industry. So here it is: Master Franchise!

A master franchise agreement gives the franchisee more rights than an area development agreement. In addition to having the right and obligation to open and operate a certain number of units in a defined area, the master franchisee also has the right to sell franchises to other people within the territory, known as sub-franchises. It is like being a franchisor, but in a specified territory. You still have great level of support from the Mothership (the main franchisor), but in your territory you take over many of the tasks, duties of the franchisor, such as providing support and training. But naturally, as you are acting as a franchisor in the territory, you are also granted the benefit of receiving fees and royalties from the franchisees in the territory.

So not only you have all the revenue potential with the one or more units that you open in your territory, but you also receive a share of all the royalties and fees paid in that territory (including part of the initial franchise fee). This can be a great path for building wealth and a residual income source!


Contact us to learn what the current ** HOT ** Master Franchise opportunities in the market are:

About franchisewizards (29 Articles)
Franchise Wizards is a Franchise Consulting company that belongs to a group of executives with over 25 years of combined experience in the Franchising Industry. Our mission is to help you achieve your dream of business ownership through franchising! Our industry experts can help you in many ways: 1) Leverage our deep expertise in the Franchising industry to help you select the right franchise for your investment, based on your background, goals and budget. 2) Receive coaching during the entire franchise selection and investigation process. We will partner with you every step of the way, so you can make most of your time, and make the best decision. 3) Get preferred access to the Franchise Directors and Founders, as we are connected directly to them. 4) Get access to our network of professionals that will help you in your new venture, including Funding Partners specialized in small business funding, CPAs, Attorneys, Business Coaches, and more! Working with us has no cost to you! We work with nearly 500 franchises and are paid by the franchisors we work with, not you! We help them find qualified candidates that would be great fit for their franchise networks, at the same time we help you find the best franchise for your investment.

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