Restaurants, hotels and travel
Master franchise
The right to develop a brand across a whole country or region, including signing sub-franchisees.
Facts checked against sources onWhat does Master franchise mean?
A master franchise gives one company the exclusive right to open, run and often sub-franchise a brand across a whole territory, such as a country or region. The master franchisee pays the brand an upfront fee and ongoing royalties, and takes on building the network, finding sites and adapting the menu. The brand gets fast, capital-light growth in markets it does not know; the master franchisee gets a proven brand and a protected territory. Example: a master franchisee with 300 outlets averaging 1 million of sales, paying a 3 percent royalty, sends the brand 9 million a year. The risk for the brand is depending on one partner for a whole market.
Example
For example, Jubilant FoodWorks runs Domino's in India, and Americana Restaurants and Alshaya Group operate many Western brands across the Gulf and the wider Middle East.
Where does it come up in case interview prep?
Related terms
- Franchise royaltyThe ongoing fee a franchisee pays the brand, usually a percentage of sales.
- Asset-light modelGrowing a business without owning the heavy assets, by franchising, managing or leasing them.
- Barriers to entryWhat makes it hard for new competitors to enter a market.
- Prime costFood and drink cost plus labour cost, the two biggest restaurant costs.
- Table turnsHow many times each table is used by a new group in a meal period or day.
- CoverOne guest served a meal: the unit restaurants count.
- Same-store sales (comparable sales)The US name for like-for-like sales: growth at restaurants or stores open in both periods.
- Average unit volume (AUV)Average yearly sales per restaurant or store.
Learn it in context
See Master franchise at work in a lesson from Restaurants and food service, with checks as you go.
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