Opening a new franchise is an exciting opportunity, but it can also be a bit overwhelming if you don’t have a lot of experience. Whether you’re opening a single store or a new chain, your franchise agreement helps determine the guidelines for the relationship between franchisee and franchisor.
A franchise lawyer can help you understand your franchise agreement, but it’s important to understand what type of agreement you are entering into so that you can choose the right lawyer for the job. If you are considering opening a new franchise, here are the four types of franchise agreements that you may come across:
Single Unit Franchises
Single unit franchise agreements are the most simple and common form of agreement, and the name pretty much says it all. These agreements allow a franchisee to open a single franchise location, and they are a great way to learn about the franchise system before considering additional units.
Multi-unit franchise agreements grant the franchisee permission to open multiple units. They outline the number of units the franchisee is allowed to open over a specific period of time. If franchisee owners have multiple units, there’s a good chance that the franchise organization is stable and doing well.
Area Development Franchises
Area development franchise agreements are similar to multi-unit agreements in that they allow the franchisees to open a specified number of units. The only difference is that this type of agreement limits development to a specific area.
Master Franchise Agreements
Finally, master franchise agreements are just like area development and multi-unit agreements, but with a bit more authority. These agreements allow franchisees to open a specified number of units in a given area, but also give them the power to sell units and usually receives royalties from franchisees.
Before signing a contract agreement, make sure you talk to a professional franchise lawyer. Contact Law Works in Waterloo for expert business and legal advice on all types of franchise agreements.