Many franchisors, particularly for established or fast-growing brands, don’t offer single-unit franchise agreements at all — instead requiring prospective franchisees to sign a development agreement committing to open multiple locations over a defined schedule. This structure carries meaningfully different risks than a single-unit franchise.
What a Development Agreement Requires
A multi-unit development agreement typically obligates the franchisee (often called a “developer” in this context) to:
- Open a specified number of units within a defined territory
- Meet a development schedule — specific deadlines for opening each additional unit
- Pay a development fee upfront, often credited against future individual unit franchise fees as each location opens
The Development Schedule Is the Real Risk
The development schedule is the single most consequential element of these agreements. Falling behind schedule — due to financing delays, site availability, permitting, or construction issues, many of which are outside the franchisee’s direct control — can trigger serious consequences:
- Loss of exclusive development rights to the territory
- Forfeiture of development fees already paid
- The franchisor’s right to terminate the entire development agreement, not just the individual unit that’s behind schedule
Negotiating Realistic Timelines
Prospective multi-unit developers should push for development schedules that realistically account for the time required to secure real estate, financing, permits, and construction in their specific market — particularly in markets like South Florida, where commercial real estate availability and permitting timelines can be unpredictable. A generic national development schedule may not reflect local realities.
Force Majeure and Schedule Extensions
Development agreements should include reasonable extension provisions for delays outside the franchisee’s control — permitting delays, landlord-caused construction delays, or force majeure events like hurricanes, which are a real and recurring risk for South Florida developers specifically.
Financing Multiple Units
Development agreements require capital planning well beyond a single location — franchisees need financing not just for the first unit, but a credible plan for subsequent units on schedule. Franchisors typically require evidence of sufficient capital for the full development plan before approving the agreement, not just the first location.
What Happens If You Can’t Complete the Schedule
If a developer can’t meet the development schedule, some agreements allow a reduced scope (fewer required units, in exchange for giving up some territory exclusivity) rather than outright termination — but this isn’t universal, and depends heavily on the specific agreement’s default and cure provisions. Understanding these fallback options before signing, rather than assuming flexibility will be available if needed, is essential.
Is Multi-Unit Development Right for You?
A multi-unit development agreement makes sense for franchisees with the capital, operational bandwidth, and market knowledge to genuinely execute an expansion plan — but it significantly raises the stakes compared to a single-unit franchise, and the consequences of falling short are more severe than most prospective developers initially appreciate.
Considering a multi-unit franchise development agreement? Brent A. Levison, P.A. has extensive experience reviewing and negotiating development agreements for franchisees expanding across South Florida. Contact the firm today for a consultation.
The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.