Franchising Offers Ownership Options
Whether One Location or an Entire Area, Pick the Right Development
These days, franchisors are putting more of an emphasis on franchisees who want to open more than one location. It makes sense, really. It's easier for a franchisor to work with one franchisee in a city than multiple. To make it easier, the franchisor typically offers a better rate on franchise fees.
However, even within the multiple location option, there are other choices -- multi-unit, master and area developer. Each has pros and cons, as does the single unit franchise. Let's take a look:
• Single-unit franchise: This is the most basic unit in the franchise system and it’s the unit model that has made the “American Dream” possible for countless people. It generally has an owner-operator who manages the chain. Recently, many franchise opportunities are allowing absentee-ownership for single-unit franchises as well. On the plus side, a franchisee doesn't get overextended and can focus on growing one business. On the downside, the potential is obviously less than it would be for multiple locations.
• Multi-unit franchise: Multi-unit franchise can be of two types. It can either be a single-unit franchise which, after the success of the first, opens another location. Or, it can be a franchisee, which, at the time of opening, buys the right to more than one franchisee market and develops them within a certain time-period. Such a franchisee gets a discount on the franchise fee. The positives in this would be a better ability to market the product and locations that are situated where the customers are, even if that's in multiple spots. People won't drive across town to pick up a pizza, no matter how good Garlic Jim's is. In this model, the franchisee determines the rate of growth. The negatives are potential failure on a greater scale, plus being stretched too thin.
• Area developer: This is another kind of multi-unit franchise, but the difference is the market is bigger. The franchisee guarantees that he or she will open a set number of franchises in the area within a specified amount of time. They generally run one or more units themselves and sell franchises to others. People who excel at these franchise offers need to have some experience in the business world to qualify. Working capital requirements are huge, but the revenue potential is much greater. The area may be as small as a metropolitan area, or as large as several states.
• Master franchisee: The most prestigious and biggest franchise business for sale offer available. Not all franchise opportunities have them and those that have are, more often than not, international franchises. The market for which a master franchise is responsible for developing can be a whole country or even a whole geographical area! They act like mini franchisors in those areas, as they divide the market and sell them to single or multi-unit franchisees. In return, they get to keep a part of the franchise fee and the royalty fee. These franchisees often don't run any outlets themselves, but make sure that the franchise is working well throughout the territory. The fee for landing a master franchise can run into seven figures. This is the most entrepreneurial of the franchise options. Pros would be the opportunity for success is greater. Negatives would be that it's like running a corporation and all the headaches that come with it.
Franchising is a great opportunity, whether dreams or small or of world-domination level. There's a franchise plan that will fit.
