The Franchising Four: Which One’s Right for You?













To be your own boss, with your own business – that’s a dream that many people share. You have ultimate autonomy, learn a lot by taking your own risks and making your own decisions, and have the potential for financial independence and success.

One of the quickest ways to become your own boss is to buy a franchise. Before you call up franchise brokers to help you find the right one, though, you must consider the level you want to enter into. Generally, there are four categories or levels in franchising, and choosing the right one is almost as important as choosing the right franchise.

Single-Unit Franchises

When you think of franchising, you are most probably thinking about a single-unit franchise. This is where you’ll invest in a single unit without any expectation that you’ll open any locations in the future. Most franchisees like you enter into franchising by buying a single-unit franchise.

Operating a single-unit franchise is a great introduction to the franchise system. Being a single-unit franchisee, you’ll be very involved with almost everything your business needs to operate. As a result, you’ll gain a better understanding of how franchising works before you consider adding units.

Multi-Unit Franchises

Franchising is a great way to assess the health of a business. The more branches are open and thriving at different locations, the better. An even better sign of health is when a franchise organization has many multi-unit franchisees.

In this franchising model, the franchisee owns and operates multiple units at reduced initial franchise fees. There isn’t usually an exclusive territory where you can open. You can have all your units in one general region or you can spread your units across the country. Because of these multiple locations, you usually act as a general manager, but you’ll be less involved in the minuscule processes.

Area Development Franchises

In area development franchise agreements, the license grants you to open a certain number of franchise units in a specific area. Typically, franchisees like you will be given a production schedule, meaning you must open a certain number of franchises within a given period.

As long as you keep on track in opening units in your geographic area, you have that location where no other franchisee can open a franchise like yours. Like multi-unit franchises, owning an area development franchise means you’ll be paying reduced franchise and royalty fees.

Master Franchises

hands with floating franchising concept

The term master franchisee is often used interchangeably with area development franchisee. Probably because they’re similar in a way that to be a master franchisor, you must also be developing a franchise organization of one area.

The main difference is that by being a master franchisor, you can also sell single-unit, multi-unit, and area development franchises. For each unit you sell, you’re likely to get a part of the ongoing royalties paid by each franchise. Because of the various revenue streams, the potential return on investment of being a master franchisor is substantial.

If you’d like to be your own boss in your own business, then buying a franchise that’s established and speaks to you can be one of the greatest decisions you’ll ever make. With a good franchisor to guide you through the process and with your knack for business, you’ll likely get a return on investment in no time.