The area development method offers the opportunity for an individual to secure the rights to open and develop a specific number of units in a designated territory,
as well as to solicit prospective new third party franchisees for the Franchisor in their defined territory. Unlike a master franchise, an area developer dose not
actually award a new franchise. This responsibility remains with the Franchisor.
Because an area developer’s responsibilities is not as broad as a master franchisee, are developers often do not receive or share royalty fees generated by each franchise
unit opened in their territory. However, the area developer normally receives a portion of the franchise fees for compensation for franchise recruiting.
The Designated Market Areas (DMA) system is an excellent, almost standard, method of awarding territories to area developers and large multi-unit franchisees. These areas are
grouped simply because the market is a region where the population can receive the same mass media (television and radio) offers as well as newspapers
even internet content. There are 210 standard nationally accepted DMA markets in the United States.
Rights of the Area Developer
The area developer is granted the right to open a pre-determined number of outlets in a certain geographic territory. Typically a schedule is provided as to how many
units must be opened within a certain time period. Other franchisees may not operate in the assigned territory. Once the franchise is up and running in that particular
territory, the franchise fees and ongoing royalty payments sometimes may be decreased for the area developer.
Advantages of becoming an Area Developer
Several area developers have expressed that the close partnership with the franchise organization has helped lead to their success. Most of the time the franchise company assists
the area developers by offering them the tools that they need to run a successful operation. This includes technical support, continuous training, and marketing tools. Some
organizations also offer other services such as guidance in location selection. All in all, area development can be quite a lucrative and solid business type to be involved