In a master franchise agreement, the franchisee pays a larger than normal initial fee to have the exclusive rights to a designated region. The master franchisee will have to open an agreed number of operational units in the region over a specific amount of time. Another benefit of being a master franchisee is the right to recruit other franchisees in their jurisdiction. In other words, the master franchisor becomes the middle link in the company system. Still not the king, but more like an earl over the land it covers. As such, the master franchisee then gets to retain all, or the majority of fees paid upwards from franchises in their territory. This kind of investment has the potential to be highly profitable if executed in the right market. - In a master franchise agreement, the franchisee pays a larger than normal initial fee to have the exclusive rights to a designated region. The master franchisee will have to open an agreed number of operational units in the region over a specific amount of time. Another benefit of being a master franchisee is the right to recruit other franchisees in their jurisdiction. In other words, the master franchisor becomes the middle link in the company system. Still not the king, but more like an earl over the land it covers. As such, the master franchisee then gets to retain all, or the majority of fees paid upwards from franchises in their territory. This kind of investment has the potential to be highly profitable if executed in the right market.
- International agreements are governed through an International Franchise Agreement. Some of the downsides may include lengthy legal procedures shrouded in red tape and the potential added cost of legal and ongoing agency fees.
Subsidiary - A powerful way to conduct international franchising is when the franchisor creates a subsidiary company in the target country. This new offshoot will take full care of the development of the franchise network in the region. This strategy works for bigger markets with high potential. While this might be a slightly more expensive way to set up a new franchising system, it gives the company full control of their expansion. Furthermore, by incorporating local management with industry professionals it can lead to optimal outcomes across all aspects of business operations.
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