Types of Franchise Agreements

Following are the most common types of franchise agreements:

Single - Unit Franchise Agreements

This is the most common type of franchise agreement. This form of agreement generally allows the franchisee to open one location or one unit in a defined geographical area within a defined period of time.

Area Development Franchise Agreement - Area Developer

With this type of franchise agreement, the franchisee is referred to as an area developer. Area developers generally have the exclusive right, but not the obligation, to develop a certain number of franchises within a defined geographical area for a specified period of time.

Master Franchise Agreement - Sub franchisor Agreement

Under a Master Franchise Agreement, the franchisee, often referred to as a sub franchisor has the most control, but also has certain obligations. Sub franchisors may be required to open a minimum number of franchises within a defined geographical area within a specified period of time and may be responsible for selling franchises within the master franchise area.

Not all franchise agreements are the same. These descriptions are common types of franchise agreements. Franchise agreements are negotiable between the franchisor and franchisee.

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