An additional method of franchising is the subfranchise route which is defined as a subfranchisor who develops a certain number of facilities within a specific territory through the direct sale of franchises. In this case, the subfranchisor receives 1/2 to 2/3 of the original franchise fee plus a similar share of continuing fees paid by the franchisee.  The subfranchisor would also issue the franchise agreement and assumes all responsibilities to service and train the subfranchisees. The franchisor will generally have limited contacts or no contacts with the subfranchisees.

A modification of subfranchising is the area director.  Here an individual is granted the right, by the franchisor, to sell franchises on behalf of the franchisor.  The area director may also be responsible for the training, quality control and supervision of franchisees in his area.  The area director would receive 1/4 to 1/3 of the original franchise fee plus a similar share of continuing fees paid by the franchisee.  Some franchising companies (e.g., Subway) have used this method to help their expansion.  All franchisee contracts are with the franchisor.   

Of the three areas of multi-unit expansion: (1) area of development, (2) master franchisees, and (3) subfranchising, the most common method found in the United States is the area development agreement. This is by far the preferred method of franchise expansion. The master franchisee agreement is generally used for foreign expansion while the subfranchising route is used primarily when it is difficult to sell the original franchise units through the franchisor's normal channels of sales.