1851

Those who are in the process of franchise ownership, and don’t want to stop at one location, have likely heard the term “area development.” But what does it mean?&nbsp;An area development agreement grants franchisees exclusive territory rights in exchange for signing a contract to open a certain number of units in a particular market within a certain timeframe, according to the&nbsp;<a href="https://www.franchise.org/franchise-information/franchise-development/area-development-agreements-for-multi-unit-franchisors?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-does-area-development-mean-in-franchising-2721353#:~:text=With%20an%20area%20development%20agreement,may%20qualify%20for%20other%20incentives" target="_blank" rel="nofollow">International Franchise Association</a>. Franchisees may also qualify for other incentives when signing an area development agreement.<h4>Reasons to Consider an Area Development Agreement</h4>One of the biggest&nbsp;<a href="https://www.detailxpertsfranchise.com/blog/2017/07/20/area-development-agreement-everything-you-should-know-as-a-franchisee/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-does-area-development-mean-in-franchising-2721353" target="_blank" rel="nofollow">reasons to consider an area development agreement</a> is exclusivity. This means that you won’t compete with other franchisees because your franchisor will not allow them to operate in your area.&nbsp;There are also usually financial incentives that come along with signing the agreement. For example, the initial franchise fee for new units you acquire could be lower, depending on the terms of the agreement. Additionally, area developers can benefit from lower royalty fees after establishing a certain number of locations. It typically costs less to support area developers, meaning franchisors are able to pass these savings on to franchisees.&nbsp;At Pearle Vision, for example, signing area development agreements in targeted locations is one of the brand’s top initiatives. “Area development agreements have been an important vehicle of growth for Pearle Vision,” General Manager&nbsp;<a href="https://www.linkedin.com/in/alex-wilkes-6a1a3518/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-does-area-development-mean-in-franchising-2721353" target="_blank" rel="nofollow">Alex Wilkes</a> told IFA. “Because the agreements involve a minimum of three locations within a certain geographic area in exchange for reduced fees and exclusive territory rights, they are extremely attractive to franchise candidates interested in multi-unit ownership. And, of course, they provide a vehicle to grow our brand more quickly in strategic markets because they eliminate the need to find and qualify more licensed owners.”&nbsp;<h4>Common Challenges in Area Development</h4>For franchisors, one of the&nbsp;<a href="https://www.pointfranchise.co.uk/articles/what-is-area-development-and-could-it-be-for-me-2531/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-does-area-development-mean-in-franchising-2721353" target="_blank" rel="nofollow">biggest risks</a> of entering into an area development agreement is choosing an unsuitable franchisee. Franchisors must have trust that the area developer will be able to manage all the units in an exclusive territory in a profitable manner. If a candidate doesn’t reach their targets or maintain standards, there is a lot at stake.&nbsp;On the franchisee side, one of the most common challenges is meeting deadlines. There is usually an agreement to open a required number of franchise units by a certain deadline. If the area developer doesn’t comply with the necessary conditions, there is the risk of losing development rights. There is also the expectation that the area developer will be able to ensure all business is viable, guarantee performance and finance multiple locations.&nbsp;However, the benefits of area development may outweigh the cons. Driven and passionate franchisees can overcome these challenges and reach their goals while turning a great profit.&nbsp;

What Does Area Development Mean in Franchising?

1851 Franchise

If you’re interested in owning more than one franchise unit, it’s time to consider an area development agreement. 

what-does-area-development-mean-in-franchising

ServiceMaster Restore

ServiceMaster Restore - Disaster Response - 1851 Franchise

When Disaster Strikes, ServiceMaster Restore Moves

servicemaster-restore-disaster-response-carmen-coleman

Children's Lighthouse

How Children’s Lighthouse Stands Out Among Other Children’s Education, Childcare, and Daycare Franchises

how-childrens-lighthouse-stands-out-among-other-childrens-education-childcare-and-daycare-franchises

The Growth Coach

The Growth Coach Franchise Costs, Fees, Profit and Data for 2025

the-growth-coach-franchise-costs-fees-profit-and-data-for-2025

One Hour Heating and Air Conditioning

Why One Hour Heating & Air Conditioning Sees People as the Power Behind Franchise Growth

one-hour-heating-air-conditioning-franchise-growth

Lawn Doctor

Design with photo of John Perry and Lawn Doctor logo

How a 20-Year Industry Veteran Tripled His Sales With a Lawn Doctor Franchise

lawn-doctor-franchise-success-story-john-perry

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Design with American and Federal Reserve flags against light blue background

Federal Reserve Expected To Cut Rates by Quarter Point, a Move That Could Boost Franchise Growth

fed-rate-cut-boosts-franchise-growth

Potbelly to be Acquired by RaceTrac in $566 Million Deal 

racetrac-acquires-potbelly-in-566-million-deal

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

health-care-hiring-slowdown-in-home-care-franchise-opportunities

Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

caribou-coffee-names-scott-kennedy-ceo-eyes-continued-growth

McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

mcdonalds-launches-extra-value-meals

Technomic Releases Annual Ranking of the Top 15 Fast-Food Chains in the U.S.

technomic-releases-annual-ranking-of-the-top-15-fast-food-chains-in-the-us

Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

smoothie-king-food-menu-power-eats

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

What Does Area Development Mean in Franchising?

MORE STORIES LIKE THIS