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Master Franchisee

Another major method of developing multi-unit franchises is handled through a master franchisee program. The master franchisee relationship is defined as a right to solicit prospective franchisees and to provide training and other services to franchisees in exchange for a percentage of the initial fees and royalties paid by the franchisee to the franchisor. In a master franchise relationship the individual has the right to develop, own, and operate franchise facilities within the territory, as well as to seek other franchisees who may operate individual units.

Probably the major use for the master franchisee arrangement is when the franchisor enters foreign countries and seeks out individuals or corporations to serve as master franchisees for the entire country. For example, Merry Maids has an arrangement with Duskin Corporation of Japan to develop their domestic cleaning franchises in Japan. Master franchising in the United States has disappeared to a great extent because of the emergence of multi-unit franchisees and in some cases, subfranchise programs.