Area Development Agreements for Multi-Unit Franchisors

Franchise Development

The advantages of putting a focus on your franchise locations.

By Josh Robinson, Pearle Vision

Are you in the process of buying a franchise and already thinking about where you should build your next two? Perhaps you should look into an area development agreement.

With an area development agreement, franchisees are granted exclusive territory rights in exchange for signing a contract to open a certain number of units in a particular market within a defined timeframe. They also may qualify for other incentives. At Pearle Vision, for instance, licensed owners with an area development agreement pay a reduced franchise fee and lower royalty fees.

Dr. Chris Butcher and his father, Dr. Jeff Butcher, own and operate three Pearle Vision EyeCare Centers in Oklahoma and seven in Florida. Jeff Butcher has been a licensed owner with Pearle Vision since 1999 and Chris Butcher joined Pearle Vision in 2011 after graduating from optometry school.

“Since we are both eye doctors and entrepreneurs, we knew from the beginning that we wanted to be  multi- unit owners with Pearle Vision,” says Chris Butcher. “As optometrists, we were immediately attracted to the high quality of patient care that Pearle Vision delivers so consistently, and we appreciated the corporate support in operations, marketing and supply chain that make the business easy to scale. We lived in Oklahoma and moved to Tampa because it was the right market for the area development agreement we were looking for.”

How It Started

For the Butchers, the opportunity to sign a 15-unit area development agreement was a product of the right time and location, both for growth in their business and the brand. “We wanted to develop an area so that we could streamline our efforts in a single market,” Chris Butcher says.

The Butchers have seven Pearle Vision EyeCare Centers in the Tampa market, with eight additional locations set to open over the next four years under the area development agreement. Owning such a large chunk of the market was a strategic decision driven by their commitment to the tenets of the brand, focusing on quality patient care and a great customer experience. Chris Butcher says, “Patients expect consistent experience and messaging from retail brands, and owning such a large area ensured a high-level experience for the whole market.”

Area development agreements can provide excellent opportunities for ambitious entrepreneurs who want to build a multi-unit business with a specific franchise brand or industry.”

Although many Pearle Vision licensed owners are optometrists, like the Butchers, or opticians, investment-minded individuals who are seeking to invest specifically in health franchises or to diversify their portfolios are more likely to sign area development agreements.

The Benefit of Area Development Agreements

Signing area development agreements in targeted locations is one of the top initiatives of Pearle Vision, says General Manager Alex Wilkes. “Area development agreements have been an important vehicle of growth for Pearle Vision. Because the agreements involve a minimum of three locations within a certain geographic area in exchange for reduced fees and exclusive territory rights, they are extremely attractive to franchise candidates interested in multi-unit ownership. And of course, they provide a vehicle to grow our brand more quickly in strategic markets because they eliminate the need to find and qualify more licensed owners,” said Wilkes.

Additionally, area development agreements generally are signed by entrepreneurs who are residents or who have strong ties to a particular region. Local knowledge is also plus for the franchisee as well as the brand. “A licensed owner’s existing knowledge of a market may help smooth the process of opening new locations,” Wilkes says.

Area development agreements can provide excellent opportunities for ambitious entrepreneurs who want to build a multi-unit business with a specific franchise brand or industry. If you want to grow your business quickly in a certain region, talk to your franchise development representative about the benefits that an area development agreement could deliver to you.

Josh Robinson is the Vice President of Franchising & Development for Pearle Vision North America. Find out more about Pearle Vision here