Washington, D.C. –Franchising Lingo: Multi-Unit Developer – Franchise Consulting

Continuing with our series of franchising terms and definitions, today we’re talking about the Multi-Unit Developer.  

A multi-unit developer is a franchisee who agrees to open two or more locations, generally in a defined market over an agreed upon period of time.

A multi-unit developer signs a multi unit development agreement, which not only grants exclusive access to a specific territory, it also mandates that a specific number of franchises must be opened within a particular amount of time, as defined by the contract.

Any franchisee can typically buy multiple units in their franchise, and most start off with one unit and later decide to invest in another location, and, perhaps, continue to add on more operations over time.

A multi-unit developer, on the other hand, signs an agreement granting them rights to a specific territory, and agrees to open a set number of locations within a specific time period.

One advantage to signing a multi-unit development agreement with a franchise is to lock out competition within a specific geographic area. For example, this can be advantageous when an area is rapidly developing and the franchise is popular in that area. A prospective owner, or perhaps even an existing franchisee, might have the option to sign a multi-unit development agreement in order to lock out their competition with other owners who might want to expand into the same available territories.

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NOTE: A multi-unit developer can be confused with an area developer and the Area Development Agreement. Click here for more about the Area Development Agreement.
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