Instead of growing only one location at a time, many franchisors decide to offer the option of a multi-unit development agreement to prospects in addition to a single unit offering. A multi-unit development agreement (referred to as a MUDA) is where a franchisor grants a franchisee the rights and obligation to open and operate a specific number of locations during a defined period of time, usually within a designated and assigned territory. To avoid the risks of losing a desirable territory/location or possible price increases are some of the main reasons why prospective franchisees consider this type of franchise ownership over a single unit agreement.
A Multi-Unit Agreement will have precise dates that the franchisee is required to meet – purchased, open and operated dates. There can be legal repercussions if these location dates are not met. A multi-unit agreement, or relationship, can have significant advantages for both the franchisor and the multi-unit franchisee; but it cannot be overlooked by the franchisor to be sure that the franchisee is properly capitalized for any chosen venture, but especially those with more than one location commitments.