What is a Franchise Area Developer?

“Area developer” is a term that is used by franchisers to describe people who take on a unique challenge when it comes to franchising. Franchise area developers are not content to start with just one store or business. Instead, they choose a geographic area and obtain exclusive rights, through signing an agreement with a franchiser, to open a specific amount of the franchise’s stores or businesses by a specific date.

Franchise area developers must have access to funds which can be used for such endeavors, as they will be expected to pay a development fee at the very start of the venture. The payment of this fee will ensure that their rights of exclusivity are secure. Further, each time a new store or business is opened, the franchiser will receive a fee.

Often, however, Franchise area developers receive bonuses, commissions, or other types of financial incentive each time they are successful in opening a new store or business. This can help them recover the money they initially paid.

Franchise area developers who do not accomplish their goal of opening a specific amount of the franchise’s stores or businesses by a specific date may suffer serious consequences. They may have to pay a penalty, as well as risk losing rights of exclusivity. Additionally, the agreement may be considered null and void by the originating franchiser.

Oftentimes, however, the originating franchiser is willing to work with area representatives. After all, both parties have the same goal in mind—that of expanding the franchise and making sure that it is a success.

Franchise area developers may also have to take on other duties and responsibilities. This is especially if franchisers consider them or even require them to be a sub-franchiser or even a master franchiser. If this is the case, Franchise area developers will then find people in their exclusive area who want to become franchisees. These franchisees are then given training and support by the area representatives in preparation for opening and operating a store or business in that area.

Franchise area developers who do perform these additional tasks, however, are usually compensated. The compensation comes from the franchise fee, of which they receive a certain percentage, and from the profits made by the franchise’s permission to use the franchise’s name and other “perks”. This is sometimes referred to as a “royalty” fee.

Franchise area developers admit that their chosen profession may not be an easy one; however, many are quick to say that it is well worth the challenges they face. The originating franchiser has the advantage of dealing with specific Franchise area developers rather than a number of individual store or business owners. This allows for a more effective flow of communication between everyone involved.