THE 4 TYPES OF FRANCHISE STRUCTURES
Unit [Unit] - The offering of a single franchise unit.
· Area Developer [AD] - The right to open and operate multiple units within a designated geographic area. Franchise Disclosure Documents may also use such terms as multi-unit, area franchisee, or regional developer.
· Area Representative [AR] - The right to recruit third parties as unit franchisees, and/or provide support to third parties entering into unit agreements. The AR may or may not have their own unit. Franchise Disclosure Documents may also use such terms as regional developer, area developer, or development agent. The North American Securities Administrators Association (NASAA) has mandated that separate Franchise Disclosure Documents be created for franchisors offering area representative agreements.
· Sub-franchisor [Sub]—Grants unit franchises to third parties within a designated territory. Third parties signing the unit agreements are referred to as sub-franchisees. Franchise Disclosure Documents may also use such terms as area franchisor, master franchisee, or regional franchisor. The term “Master” is typically used for such offerings outside the U.S.