For example, a franchised territory developer may agree to open five franchise sites over five years in Vancouver. The developer of the territory will pay a development fee (usually non-refundable). These multi-unit development fees are often applied in proportion to each unit`s franchise rights when the franchise agreements for these units are signed. If you are on either side of the franchise table and you have questions about these types of agreements or anything related to franchise agreements, please contact us to discuss your legal rights and options today. With today`s audit protocols, this risk is low and manageable for franchisors. Properly designed development agreements contain specific data for the development of each unit and standard franchisor protection agreements. For franchisor, they can better control market developments. When they sell multiple units to a franchisee in a territory, they are no longer obliged to search for franchisees in that sector. You can also better plan your support in this area; know exactly when the units will be put online. One mistake often made by franchisors in marketing their franchise ability is to assume that their offer will be active for both unit franchisees and multi-unit developers. When they change their offer, it is usually only a reduction in original deductible fee.
If the multi-unit franchisee were not to operate its franchise business properly or to comply with its agreement with the franchisor, it would be the multi-unit franchisee that would suffer the consequences. This model is therefore simpler and less restrictive for the franchisor in the event of under-execution by the multi-unit franchisee or in the event of termination of the contract. This regime offers many advantages to the franchisor and the land designer, but there are reasons for franchisors to be careful. Learn more about the nature of these agreements and when they are useful to both parties. Other development models are sometimes used, such as the joint venture and the territorial development agreement with a representative representing the franchisor in the territory in question and who, on behalf of the franchisor and on behalf of the franchisor, assumes certain obligations related to the role of franchisor. Although there are real benefits to the granting of a master franchise, it remains a somewhat complex transaction (since the franchisor crossed both its system and part of its franchisor`s activities in the territory under consideration) and carries serious risks (including insufficient development in the territory under consideration or dissociation with the principal franchisee). The biggest risk for a franchisor who votes for multi-family buildings is of course the choice of the fake developer. In addition to a market off the table for a certain period of time for other developments and the risk that the developer will not respect its development axis, you run into additional problems if the developer does not operate its various sites according to brand standards.