When it comes to starting a franchise, there are a variety of different agreements that can be signed between the franchisor and franchisee. Here are three typical franchise agreements that you may encounter:
1. Single-Unit Franchise Agreement
The single-unit franchise agreement is the most common type of franchise agreement. This agreement allows the franchisee to operate a single location under the franchisor`s brand name, using the franchisor`s systems and procedures. The franchisee typically pays an initial franchise fee to the franchisor, along with ongoing royalties based on a percentage of their revenue.
2. Multi-Unit Franchise Agreement
A multi-unit franchise agreement allows the franchisee to operate multiple locations under the same brand name. This agreement is ideal for franchisees who are experienced with running a single location and are looking to expand their business. Multi-unit franchisees typically pay a higher initial franchise fee and ongoing royalties than single-unit franchisees.
3. Master Franchise Agreement
A master franchise agreement is similar to a multi-unit franchise agreement, but the franchisee is given the right to sub-franchise to other investors in a specific geographic area. This agreement is often used for international expansion, as it allows the franchisor to enter a new market without having to navigate the local legal and cultural landscape. The master franchisee typically pays a larger initial franchise fee and ongoing royalties than other franchise agreements.
In conclusion, there are a variety of franchise agreements available to potential franchisees. It`s important to thoroughly review any agreement before signing to ensure that it aligns with your business goals and financial capabilities. A franchise attorney can help you navigate the legal complexities of these agreements and help you make an informed decision.