Exploring the Four Types of Franchises You Can Buy
Exploring the Four Types of Franchises You Can Buy
1. Single-Unit franchise: This is the most basic of all franchise agreements and is the easiest of them all. A single-unit franchisee buys the rights to operate and maintain a single location either from the franchisor directly or from the master franchisees. The start-up cost depends on what franchise opportunity the franchisee has gone for. Generally, single unit franchisees run the unit on a day-to-day basis and are known as owner-operator. Top franchises often provide restricted territory, which can be a certain radius around the unit or if it’s a home-based franchise, then the territory can be certain zip codes. Basic business skills are the fundamental requirement to buy a franchise as a single-unit operator.
2. Multi-Unit franchise: When a single-unit franchisee is successful with one location, most franchises allow such a franchisee to start another unit in the same geographical area (but in a new territory, if the franchisor is providing restricted territory). Many franchisors offer reduction in the franchisee fee and other costs when it’s starting a franchise for the second time. Only successful franchisees who have the required financial capabilities in terms of both liquid capital and net worth qualify as multi-unit franchisees. The franchisees hire competent managers to help them run the additional units. This type of franchise is a good sign for a franchise system, as it shows how profitable the business is.
3. Are Developer: Area developer can be groups, individuals or business “entities” who buy a large geographical area and then sub divides them and develops them one at a time. As long as they develop the required number of units within a given period, the area is exclusive. The size of the area can be anything between a part of a city to a county or a state. Franchisors that have such a franchise business for sale offer generally look for people with years of experience in the market and very good financial capability. The area developers get to build the franchise units at a reduced royalty fee and franchise fee.
4. Master Franchise: The most coveted, costliest and biggest of all franchise agreement – it’s offered only by a very few companies. The area of operation for a master franchisee can be a whole city or even a whole country! The master franchisee is like a mini franchisor; its main aim is to sell the areas under it to prospective single, multi and area developer franchisees. A single location is often developed as a training facility and income source. Master franchisees get a percentage of the franchise fee and royalty fee that people who buy a franchise pay to the franchisor. Additional income is generated from distributing products through the franchisees and by real-estate interests. International franchises often use this form of franchise agreement to expand in a new country, as it makes their job easier and faster.
Exploring the Four Types of Franchises You Can Buy - To learn more about this author, visit Michael Hemenway's Website.
Like this article? Share it with your friends
Did you know that there are four kinds of franchise agreement that you can choose from while answering a franchise business for sale offer? Here are the four of them with detailed descriptions and what you can expect from them:
1. Single-Unit franchise: This is the most basic of all franchise agreements and is the easiest of them all. A single-unit franchisee buys the rights to operate and maintain a single location either from the franchisor directly or from the master franchisees. The start-up cost depends on what franchise opportunity the franchisee has gone for. Generally, single unit franchisees run the unit on a day-to-day basis and are known as owner-operator. Top franchises often provide restricted territory, which can be a certain radius around the unit or if it’s a home-based franchise, then the territory can be certain zip codes. Basic business skills are the fundamental requirement to buy a franchise as a single-unit operator.
2. Multi-Unit franchise: When a single-unit franchisee is successful with one location, most franchises allow such a franchisee to start another unit in the same geographical area (but in a new territory, if the franchisor is providing restricted territory). Many franchisors offer reduction in the franchisee fee and other costs when it’s starting a franchise for the second time. Only successful franchisees who have the required financial capabilities in terms of both liquid capital and net worth qualify as multi-unit franchisees. The franchisees hire competent managers to help them run the additional units. This type of franchise is a good sign for a franchise system, as it shows how profitable the business is.
3. Are Developer: Area developer can be groups, individuals or business “entities” who buy a large geographical area and then sub divides them and develops them one at a time. As long as they develop the required number of units within a given period, the area is exclusive. The size of the area can be anything between a part of a city to a county or a state. Franchisors that have such a franchise business for sale offer generally look for people with years of experience in the market and very good financial capability. The area developers get to build the franchise units at a reduced royalty fee and franchise fee.
4. Master Franchise: The most coveted, costliest and biggest of all franchise agreement – it’s offered only by a very few companies. The area of operation for a master franchisee can be a whole city or even a whole country! The master franchisee is like a mini franchisor; its main aim is to sell the areas under it to prospective single, multi and area developer franchisees. A single location is often developed as a training facility and income source. Master franchisees get a percentage of the franchise fee and royalty fee that people who buy a franchise pay to the franchisor. Additional income is generated from distributing products through the franchisees and by real-estate interests. International franchises often use this form of franchise agreement to expand in a new country, as it makes their job easier and faster.
Exploring the Four Types of Franchises You Can Buy - To learn more about this author, visit Michael Hemenway's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Michael's articles
 |
|
brandEXPANSION Hot Press - Stay up to date with the latest franchise news and opportunities with Hot Press, brandEXPANSION’s daily news and information website. Our staff of writers are dedicated to helping you make the most of your business and providing you information to make the best decision about which franchise industry is right for you.
|
|
 |
 |
|
Michael Hemenway Video - Michael Hemenway's brandEXPANSION represents only the best franchises for sale. We help you search and buy a franchise business for free. We can show you how to franchise your business.
|
|
|
 | |||||||
|
 | ||
 |
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Intro to M&A Instant Press Release Auditory, visual preference? How To Win New Business Trainning Template |
|
 | ||
 |
Write The PR
Press Release Builder | |
 |
Top 50 Geek Business Blogs
Top 50 Geek Business Blogs | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
| ||||||||||
|
| ||||||||||
|
|
||||||||||