Main Franchise Model

Master Franchising, as one of the formats of franchising, is widely used in theworld .With a master franchise agreement, the franchisor grants the master franchiseethe right to sub-franchise the franchisor's concept to others within an exclusive territory,thereby creating a three-level franchise relationship. This paper takes a deep look at master franchising, through comparative research andcase study, analyzes the special mode and responsibilities of each party, includingfranchisor, master franchisee and franchisee. The characteristic of master franchising isthat it leads to rapid expansion of the franchising system, higher scale effect, sharingfees and revenues between franchisor and master franchisee as well as the lower controlof franchisor to the whole franchising system. A case study of century 21 Real Estate isgiven followed by analysis. The next part is trying to explain why master franchising isso popular and applicable. The reason lies in that more and more enterprises go into theworld, pursuing a strategy of fast growth, market penetration and brand expansion. Thebooming of service sector is also a reason. Master franchising is especially popularwhen the franchisor is unfamiliar with target country, or the franchisor wants fastgrowth of franchising systems though lack of resources or when there is huge marketpotential though the commercial infrastructure is poor. Finally the author tries to revealsome useful conclusions related to the use of master franchising in China.