When faced with the prospect of expanding a franchise into a new
territory, many franchisors employ the model of master franchising.
As opposed to direct franchising (where one franchisee is granted
the right to open one business) or area development (where one
franchisee is granted the right to open several businesses across a
particular region), master franchising contemplates something
larger.
A master franchisee is a bit of a hybrid franchise entity,
because it acts as a franchisee in its operation of one or several
businesses, but is also granted the right to be a franchisor and
sub-franchise to franchisees across a specified region,
such as a province, state or country.
However, the road to successful master franchising is fraught
with potential pitfalls along the way of which both franchisors and
prospective master franchisees should be aware. The first problem
encountered by franchisors is picking the wrong master franchisee.
For an emerging franchise
