An area representative relationship looks very much like a master franchise relationship, with one major distinction. The area representative does not enter into any agreement with the unit franchisees. The unit franchisees sign a franchise agreement with the franchisor directly.
The area representative is, in reality, only a commissioned franchise salesperson and also the commissioned field support person for the franchisor in a geographic area. The area representative pays the franchisor a fee to enter into the relationship and shares with the franchisor the franchise fees and royalties paid by the franchisees in their territory. The area representative provides the franchisees in their territory some opening and continuing support and, like the master franchise, some of that support provided may be shared with the franchisor.
As with multi-unit and master franchise relationships, the area representative agrees to establish a specific minimum number of units, during a specified time period, in a defined territory. The difference between a master franchise relationship and an area representative is that the master franchisee signs an agreement with each sub-franchisee, while the area representative does not. The area representative also does not need to create or register their own franchise disclosure document.