Like this article? PLEASE +1 it! Evan Signature
Evan Carmichael Top Header
Share for a Cause









ADVANTAGES TO AREA DEVELOPMENT OPPORTUNITIES

Written by: Ken Hollowell

Article Overview: When considering buying a franchise, there are single unit franchises and area development territories. The articles explains the differences.

Free Download - Who Should You Use to Raise Your Capital? By Ken Hollowell
Name: Email:

ADVANTAGES TO AREA DEVELOPMENT OPPORTUNITIES

Advantages To Area Development Opportunities

Be sure and investigate that the franchisor is committed to the following:
• Leadership
• Integrity
• Knowledge that people are profits
• Commitment to excellence and success
• Belief in a proven system that works
Area Development Agreements allow for explosive growth opportunities in territories that have yet to be developed. These agreements allow for strong local support as wells tremendous investment opportunities to those who stake out a territory and then develop the area. Usually an Area developer will also operate an Individual franchise unit. Area development agreements are developed on an individual basis.
Area development
An area development agreement differs from a multiple single-unit relationship primarily because the franchisee agrees up front to open a specific number of locations during a defined period of time and within a specified area.
For example, suppose that you want to open ten outlets in your State. If you go to the franchisor and buy one franchise at a time, you risk having to share the market with other franchisees from the system or risk that the franchisor will have sold all the available franchises before you are ready to purchase them.
Instead, you enter into an area development agreement. This means you agree to open and operate the ten outlets over a defined period — say, five years — and the franchisor grants you exclusive rights for the development of locations in your area.
When it comes to applying the fee you pay for the development rights, nothing is typical; it varies from company to company. As you identify each location, you usually sign a single-unit franchise agreement. What you pay and how the franchisor applies the fee varies depending on the agreement. Most franchisor will usually use a formula when dealing with 10 or more outlets in the Area Development Agreement are considered, a 50% reduced fee of the initial franchise agreement is accepted.
If you fail to meet the development schedule, the franchisor typically has the right to cancel the development agreement and keep the area development fee.
Lump sum Area Development Fee instead of individual franchise fees.

No competition from other franchisees.

Build out costs are usually lower.

Inventory and buying can be centralized.

Co-Op advertising is possible.

The rights to sell the outlet as a “turn-key” business and transfer the franchise agreement to a third party.

Usually easier to obtain Press and Articles for the business.

Related Articles
  Franchise Opportunities many don't know about.
  Home Business Expert: Benefits Of Personal Development Education
  Application Development for SmartPhones
  Home Small Business Ideas
  The Top 7 reasons why Franchising is Better than a Brand New Business

Home > Franchises > Ken Hollowell > ADVANTAGES TO AREA DEVELOPMENT OPPORTUNITIES
Article Tags: franchise consultant, ken hollowell, our business, profran consultants

About the Author: Ken Hollowell
RSS for Ken's articles - Visit Ken's website

– Ken M. Hollowell, founder of both Prfran Consultants, Inc. and National Franchise Services, Inc. and is a leader in the field of franchise development since 1980. Mr. Hollowell has lectured before many business organizations, Universities and Colleges on the subject of franchising and hosted a radio talk show of radio for years. He conducts numerous seminars annually on franchise development and investing in a franchise business throughout the United States. He is regularly requested by the Small Business Administration in Washington, D.C., S.C.O.R.E., Learning Annex and the International Franchise Association to speak on franchising. Mr. Hollowell's well-rounded experience and practical knowledge in both development and marketing have led him to be one of the most sought after franchise consultants in America. Mr. Hollowell has written many articles on both developing a franchise network and buying a franchise. Mr. Hollowell sits on no less than a dozen boards of directors.

Click here to visit Ken's website Dashed Line

More from Ken Hollowell
The Fear of Purchasing a Franchise
11 Things You Need To Know About Buying A Franchise
ARE FRANCHISES CHANGING WITH THE TIMES
The Royalty Fees of a Franchise
Do I Offer Debt or Equity to Raise Capital


Related Forum Posts


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.



Featured Article


Bottom Footer
Share for a Cause












Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
Name:
Email:
Popular Articles

Mistakes Made by New or Inexperienced Sales Staff

Marketing & Sales tools – going back to basics

Environment and productivity at the office

Suggestions

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.