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.

These pages are for informational purposes only and do not establish an attorney-client relationship between the author and the reader. Additionally, we make no representations or warranty to any of the information as legal information is subject to change over time. Before taking action on any of the information presented, you must discuss this with your attorney to ensure it is relevant and applicable to your current situation.