The Three Levels Of Franchise Ownership

There are three commonly accepted levels of franchise ownership, each with varying levels of responsibilities and investment levels.

 

Single unit

In a single-unit franchise the franchisee will be responsible for running one area/territory and are usually heavily involved in the day-to-day operations of the business.

When considering transitioning out of corporate life into franchise ownership, most people will go into a Single-Unit franchise however it helps to understand the difference between the three.

 

Multi-Unit/Area Developers

Multi-Unit franchises and Area Developers join the franchise under the expectation that they will open many stores, usually to a development schedule. This level of franchise ownership is for the more experienced operator/investor and normally requires an investment that totals well into the hundreds of thousands/low millions.

The Multi-Unit franchisee/Area Developer will typically have a support infracted behind them and not be involved in daily operations themselves. Multi-units are typically sold at reduced rates giving the multi-unit franchisee more capital to invest in establishing operations.

 

Master Franchises

Master franchises are generally used when a franchise is expanding internationally and require the network, knowledge and resources of local entrepreneurs.

The master franchisee will typically purchase the exclusive right to operate the franchise in its territory, which could be a city, state or country, and will act as the sub-franchisor.

In addition to opening multiple units themselves, the Master Franchisee is permitted to recruit franchisees to the brand, collecting franchise fees and royalty payments. Master Franchisees are usually highly sophisticated investors and/or corporate investors and have substantial operational experience and the financial backing to invest millions into their franchise.

If you are interested in learning more about the possible opportunities in franchising, please schedule a time to speak with one of our Franchise Search Consultants and let us help you take the next step into business ownership.

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