Category of Franchises
Single Franchise - Buying a single unit franchise is the most likely place a brand new entrepreneur would begin. In this type of franchise, the franchisee would only be responsible for running one unit. However he or she would be extremely involved with all of the daily operations of the business. The franchisee typically has a particular territory that is covered by the unit. Usually the franchisor assigns a number of miles to be covered by each unit in operation. If the business is home-based, there may be four or five zip codes included.
Multi Unit Franchise - The franchisee owns and operates more than one franchise unit. Units may be in random areas of your choosing. The franchisee is typically less involved with each individual unit, but manages the multiple unit operations.
Area Development Franchising - In area development franchising, the franchisor grants the franchisee, (also called area developer) a territory within which the franchisee agrees to open and operate an agreed number of unit franchised businesses according to a development schedule. In an area development franchise, the franchisee signs two forms of agreement, an area development agreement which specifies the territory and the schedule for establishing the franchised units, and a unit franchise agreements. Before each franchised unit is established, a separate unit franchise agreement is signed. Area development franchising involves only two parties, the franchisor and the franchisee. Usually, if the franchisee fails to open units at the rate required by the development schedule, the franchisor may terminate the development agreement but allow the franchisee to continue operating any unit franchised business that already have been opened
Master Franchising - Sometimes called a master or regional developer, a master franchisee has the exclusive franchise rights in his or her area (usually a metropolitan area or even an entire state). He acts as the business development partner for the franchise company in his specific territory or region, i.e., a state, counties or metropolitan area. The master, in addition to opening franchises, sub-franchises (selling a single unit and multi unit franchises), keeping a significant portion of the franchise fee as well as ongoing royalties from the franchisees within his or her area. There may also be additional income available from distribution of products through the franchisees in the area. The master essentially becomes a franchisor in his or her own area without having the costs of the trial and error the original franchisor went through.
Absentee Investor - A conventional wisdom on franchising says that absentee ownership is not ideal in running franchise units; Therefore, most franchises offer franchising opportunities that do not allow absentee ownership. Perhaps they should think about allowing absentee ownership, as it presents a win-win solution for both franchisee and franchisor.