Massage Envy, a fast-growing franchisor established in 2002, recently signed a multi-unit area developer agreement with a franchisee to develop 5 to 10 centers in Hawaii. While the use of multi-unit area developer agreements mainly defines franchisee development rights, this strategy has benefits for both franchisees and franchisors alike. Regardless of how and when the franchisor chooses to execute these agreements, the ultimate goal is to responsibly increase the growth of the franchise.
Massage Envy Example
As a franchise, Massage Envy offers convenient massage and spa services at affordable prices. This philosophy and sound growth strategy have allowed the company to expand to 660 locations in 43 states since 2002. Massage Envy's recent multi-unit area developer agreement with two former salesmen in Hawaii facilitates new regional development in the state for 5 to 10 centers. Executing this type of agreement ensures that the Massage Envy centers opened in Hawaii follow the brand's system of values and customer service.
Franchisor Strategy
While a multi-unit area developer agreement gives a franchisee the rights to open and operate more than one unit within a designated region, it also provides the franchise system with growth stability. For a franchisor, knowing that a franchisee is following a plan and schedule of controlled growth of the franchise brand throughout a region is important. Multi-unit area developer agreements also save the franchisor time and money because they reduce (i) sales and franchisee training time; (ii) support needs due to less franchisees; and (iii) advertising costs.
Franchisee Benefits
The main benefits of multi-unit area developer agreements for franchisees include initial rights to open and operate more than one location of franchise in a designated area, and lower franchise and royalty fees for opening multiple locations. These agreements give franchisees a competitive edge throughout a region and allow them to negotiate more desirable locations and schedules for opening their franchises. Franchisees can also save money on freight and product storage after establishing central offices and warehouses.
Growth for All
While single unit franchisee contracts have their uses, multi-unit area developer agreements focus on responsible franchise growth and development by region, which benefits both franchisors and franchisees. Massage Envy's growth strategy and use of multi-unit area developer agreements, particularly in its recent expansion to Hawaii, serves as a good example for employing these types of agreements.
If you are on either side of the franchise table and have questions about these types of agreements or anything related to franchise contracts, contact a local attorney experienced in franchise law to discuss your legal rights and options today.
For questions or additional information about Einbinder & Dunn's legal services, please contact Einbinder & Dunn by clicking here to fill out a contact form or by calling 866-490-4909 or 212-391-9500 to speak with one of the firm's partners.
On Monday, April 16th, 2012, Julie Lusthaus was interviewed in a 30 minute segment about Franchising on WVOX 1460 AM radio by Marsha Gordon, President & CEO of The Business Council of Westchester.
