What Does an Area Development Agreement Entail?

Scooter's Coffee Drive-Thru with American Flag

Sometimes entrepreneurs want to reach for the stars, and one business isn’t enough. Thinking about buying multiple franchises? Learn what’s covered in an area development franchise agreement and the benefits of area development franchising.

WHAT AN AREA DEVELOPMENT AGREEMENT IS

If you’re wanting to have several locations of the same franchise, you may want to look at getting an area development agreement, which can also be called a multi-unit development agreement. It’s basically a contract that allows you, the franchisee, to have a territory to yourself. In exchange, you’ll promise to open a set number of locations within a certain amount of time. There are usually incentives to open multiple locations, since it’s beneficial to both parties. Things like startup or construction costs may be lowered per additional location.

Think of it like buying a franchise from Costco: Instead of just the one location, you’re buying in bulk. It’s a bigger investment upfront, but overall, a more cost-effective solution.

Because the franchisee has to agree and follow through with the development of multiple locations, it may take a more experienced businessperson. However, for the franchisor and franchisee, it can be more streamlined, with one point of contact for an entire territory. Locations can be strategically planned ahead of time and opened when you’re ready to expand according to your agreement. It’s a more profitable way of how to own a franchise.

You won’t be competing within your territory with other franchise owners. You’ll only be in competition with yourself.

BENEFITS OF OWNING SEVERAL FRANCHISE LOCATIONS

  1. Back to the Costco analogy. While entering a multi-unit development agreement is a large investment, you actually save money over the long haul with incentives. This means your profits, overall, can be larger the longer you’re in business. Instead of slowly chipping away at expansion, you’re ready for it from day one. This includes your growth plan. When you’re buying 100 rolls of paper towels at Costco, you should probably have a plan on where you’re going to store all these. With area development, you know exactly where your locations will be, and no one else will be storing their paper towels on your shelves. An agreed-upon number of locations will help saturate your market just enough to increase visibility and profit. Scooter’s Coffee does market research to ensure franchises aren’t too close together so franchisees can maximize profitability.
  2. Owning several locations is one of the most robust wealth-building strategies. Your profits can multiply faster across each location. Like stocks or real estate, the more you own, the bigger your return. Owning a franchise is a big responsibility, and owning several is an even bigger one, but the rewards are bigger too.
  3. You can pay lower royalty fees over time. This is another reason multi-unit development agreements are good wealth-building strategies. Because you’re also doing the franchisor a favor by owning and operating more locations, your royalty fees can be negotiated down.

HOW AN AREA DEVELOPMENT AGREEMENT CAN HELP

An agreement to develop an area for a franchise is a partnership. The franchisor provides support, training, marketing, and more. Having several units means owners need to be on their A-game, but so does the franchisor to help guide and support the budding businesses.

When building out a business, a plan and a successful model are crucial to attain goals and achieve success. With an agreement like this, the scaling is laid out, planned, and ready to execute. You just have to follow through with your commitments.

WHY EXPAND WITH SCOOTER’S COFFEE

Scooter’s Coffee has a proven business model ready to be copied and pasted in markets across the U.S. We’re committed to helping franchisees succeed and provide support, training, and a partnership network that links you with other franchisees who can share their own wisdom and advice.

Area development is beneficial to everyone – the more Scooter’s Coffee locations, the more customers see the brand and consume our amazing drinks. If you’re looking to open two or more locations, we’ll be right there with you creating a reasonable development schedule for building your stores. We’ll also slash the franchise development fee in half for multiple locations.

For our traditional Scooter’s Coffee drive-thru kiosk, there’s a $40,000 franchise fee for one location; after two or more, that drops to $20,000, saving you tens of thousands on development from the get-go.

To open a Scooter’s Coffee franchise, you’ll need $500,000 in net worth and $200,000 in liquid capital. Our proven business models will help you succeed and get your investment back. A drive-thru coffee kiosk can cost between $794,000 to $1,264,500*, depending on construction costs and other expenses.

Request franchise information if you’re ready to scale your business bigger and better and start serving the amazing Scooter’s way.

*Refer to Item 7 of our FDD

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