A very popular method of developing multi-unit franchisees is when the franchisor offers an area development agreement to a prospective franchisee. This agreement allows the franchisee the opportunity of expanding to several stores within a geographic area (generally the DMA) over a specific time period, generally four or five years. The franchisor may require the addition of five, six, or ten stores during this time period.

The franchisee generally pays an up-front price for these franchise units. It is very common for a franchisor to charge $5,000 to $10,000 per unit reserved in the area development agreement. As each new franchise is opened, then the franchisor often deducts from the franchise fee the amount which was paid in the area development agreement for that specific franchise. For example, if the area development agreement included five stores within the television (county) boundaries, then the franchisee would pay an initial $25,000 for the rights to have an area development agreement. If the franchise fee was $20,000 then the franchisee would only pay $15,000 for each franchise opened. The additional $5,000 was covered in the area development agreement. If the franchisee fails to meet the schedule of development then the franchisor has the right to reduce the area or revoke the exclusivity granted by the original development agreement. Regardless of this, all signed individual franchise agreements would remain in effect.

The area development agreement allows the party to pay a "option price," generally based on a per-facility formula, which grants the right to develop a specific number of franchise facilities within a prescribed time period in a specific geographic territory. The franchisor will then, typically, issue an individual franchise agreement for each facility as it is developed and opened.