Area development is similar to multi-unit franchising. The only difference is that this type of franchising typically involves a greater number of units encompassing a larger territorial area. Area developers have the opportunity to raise brand awareness quite rapidly in a given locale.
Rights of the Area DeveloperThe area developer is granted the right to open a pre-determined number of outlets in a certain geographic territory. Typically a schedule is provided as to how many units must be opened within a certain time period. Other franchisees may not operate in the assigned territory. Once the franchise is up and running in that particular territory, the franchise fees and ongoing royalty payments sometimes may be decreased for the area developer.
Responsibilities of an Area DeveloperSince area developers are responsible for financing each unit as it opens, they have a vested interest in ensuring that each unit is operated in the best possible manner. The area developer spends a great deal of time working to initiate each site. During the same time that the developer is ensuring the successful startup of one unit, he or she is scouting out a location for the next outlet.
As the outlets are being set up, the area developer typically hires some support staff to run each location. Eventually, the area developer will oversee all the units at a higher, simpler level.
Characteristics of an Area DeveloperArea developers can typically expand their business rather quickly. Since they are usually required to put some of their own money into the franchise, developers have a vested interest in creating successful units under them.
These developers are very knowledgeable about franchising. They have had the experience of operating a franchise or two prior to becoming an area developer. With some of these opportunities, area developers are required to continue operating a particular unit at the same time as serving as an area developer.
Advantages of becoming an Area DeveloperSeveral area developers have expressed that the close partnership with the franchise organization has helped lead to their success. Most of the time the franchise company assists the area developers by offering them the tools that they need to run a successful operation. This includes technical support, continuous training, and marketing tools. Some organizations also offer other services such as guidance in location selection.
All in all, area development can be quite a lucrative and solid business type to be involved with.