Franchising isn’t a one-size-fits-all business opportunity. Here are the four most common types of franchises to consider so you can decide which franchise strategy fits you best.
The world of franchising is vast and varied across many industries, with different investment ranges, qualifications, and responsibilities that can appeal to just about anyone with an entrepreneurial spirit and a drive to succeed. The franchisor operates around a central structure that grows by incorporating new owners (franchisees) and locations. Franchisees pay the franchisor for use of the brand name, business model, support, and other proprietary elements. The type of franchise you choose to invest in is as much a personal choice as a reflection of your professional aspirations.
The structure of the franchise business is typically defined by the number of units offered to a franchisee and the territory development rights included in the franchising contract, which is a legally binding agreement between franchisors and franchisees.
In a single-unit franchise agreement, the franchisee is granted rights to open and operate a single franchise unit within a brand. This type of arrangement is the simplest and most common and is particularly appealing to first-time franchise owners as they ease into the world of franchising. Over time, if the franchisee and franchisor relationship is proving to be mutually beneficial, they may choose to expand their contract to include more locations. Single-unit franchise ownership may often be appealing to those operating a business in the same industry and wanting to convert to the existing franchise brand, allowing them to quickly boost the business and gain many other benefits in the process.
In most types of franchises, a multi-unit franchise agreement grants a franchisee the right to open and operate multiple franchise units. This type of arrangement may have specific territorial parameters, protections, and development schedules. For example, a franchisee may be required to adhere to an agreed upon schedule for developing a certain number of units within a specific time frame. If the franchisee fails to meet the deadlines, the franchisor may have to right to terminate a contract or pursue development with other interested parties.
Multi-unit franchising has become a popular investment tactic in recent years. Through the combination of financial incentives and opportunities for compounded financial gain, franchisors are attracting entrepreneurs who want to strengthen their portfolios within proven franchise systems that offer long-term growth. Owning multiple franchises can be a strong wealth-building strategy, since diversification of your investment means you won’t have to rely heavily on one location for primary income.
Economies of scale can be found in inventory buying, marketing, advertising, staffing, and training and are more likely to work in your favor if you’re considering multiple-unit franchising. Given all the cost savings and reduced expenses, multi-unit franchise ownership often means higher ROIs and greater financial success with the backing of a proven brand.
Area Development Franchise
Similar to a multi-unit agreement, an area development franchise agreement grants the franchisee rights to open and operate multiple units during a specified time period. The difference is that area development franchisees are granted exclusive development rights within a particular territory, precluding other operators from opening units in that area unless they’ve recruited those operators to do so.
Master franchise agreements give franchisees even more rights and capabilities than area development agreements. Beyond the contracted obligation to open a certain number of units within a defined territory, which is often another country, master franchisees act as sub-franchisors, introducing the brand and upholding its standards in a new region. They also gain the right to sell franchise units within their area to other franchisees. Master franchisees are similar to franchisors, except on a more limited scale. Many of the responsibilities are the same, including providing training and ongoing support, and they also collect their offshoots’ franchise fees and royalties directly. Master franchise agreements are often a strategy that younger franchises employ to help with rapid growth of the franchise system.
The American Family Care Model
The AFC model is built to provide ample multi-unit and clinic conversion opportunities across the country in the vital and recession-resistant urgent care franchise market. As the leading name in urgent care, our brand has stood the test of time by providing the highest level of care and building cooperative, mutually beneficial relationships with our franchise owners.
To learn more about AFC franchise opportunities, apply now!