The individual franchise agreement is the most common type of franchise agreement, which involves the sale of a single franchise for a specific location.
For example, an individual may purchase a CD Warehouse franchise to be constructed and operated at 901 Pearl Street in Boulder, Colorado.
The nationalfranchise.com defines the individual franchise agreement in the following way,
“Individual unit is the most familiar form of franchising. By signing a Franchise Agreement, the Franchisee receives the right to operate a single franchise operation, often within a protected territory.”
An individual franchise agreement can serve people with the following benefits:
- A franchisor can more simply and easily manage her/his growth.
- Many people believe that an owner as an operator can be the most productive manager.
- Often, a franchisee-managed location can be more cost-effective because no manager’s salary is involved there.
- By using this approach, a person can learn the way to be a franchisor by selling just a few units her/his first year.
- Far more individuals are available who can afford to start and manage a single franchise rather than various locations.
- If any problem occurs with a franchisee who has signed this agreement, this issue impacts only one location.
- A person can determine if the franchisee can manage more than one franchise before making a commitment to them by signing this agreement. Then s/he can grant additional operations using this agreement.
More from this Section
- Pro forma balance sheet
The pro forma balance sheet provides a firm a sense of how its activities will affect ...
- Liquidity ratio
Liquidity ratio measure of a firm’s ability to pay its short-term debts as they come ...
- Elevator speech (or pitch)
Elevator speech (or pitch)– a brief, carefully constructed statement that outlines the ...
- Variable costs
Variable costs are the costs that are not fixed that a company incurs as it generates ...
- Free-rein or lasses-faire leadership style
Free-rein or lasses-faire leadership style means characterized by the leader permitting ...