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Do all franchisors offer the opportunity to invest in multiple units?
Shelley Nadler writes:
It’s often the case that franchisors will allow franchisees to invest in more than one franchise unit, but it depends on the type of franchise and size of territories granted.
If a franchisee is to be granted a second territory, this may involve them employing a manager. There are some franchisors who may feel that, due to the particular circumstances of the franchise business, they only want the franchisee and not a manager to run it.
There may be other types of franchise where the franchisee takes on a management role and employs others to manage the business. This kind of franchise can make it easier to add on additional units.
Many franchisors are happy to grant successful franchisees rights to operate the business in another unit. This is particularly common in restaurant and fast food franchises, where individual outlets are managed by store managers and the more outlets a franchisee operates brings economies of scale.
Some franchisors offer ambitious and well funded franchisees area developer agreements, where they are given the right to open a multiple number of franchise outlets to a predetermined schedule and within a given area.
Shelley Nadler is a legal director in Bird & Bird’s international franchising team and has many years’ experience of advising on all aspects of franchising.
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