The Power of Master Franchise in Franchise-based Sales
What type of franchise arrangement is less common but accounts for a larger percentage of franchise-based sales?
a) Single-unit franchise
b) Multi-unit franchise
c) Master franchise
d) Area development franchise
Final answer: A Master franchise is less common but accounts for a larger percentage of franchise-based sales.
Explanation
The type of franchise arrangement that is less common but accounts for a larger percentage of franchise-based sales is a Master franchise. This arrangement allows rapid expansion in a specific territory and generates a higher volume of sales due to its larger scale of operations.
The Power of Master Franchise
Master franchise: A less common but powerful franchise arrangement that dominates a larger percentage of franchise-based sales.
A Master franchise differs from other types of franchise agreements like Single-unit, Multi-unit, or Area development franchises in its unique structure and operational model. In a Master franchise agreement, the franchisee essentially acts as a mini-franchisor within a specific territory or region.
Rapid Expansion: One key advantage of a Master franchise is its ability to facilitate rapid expansion. The Master franchisee has the authority to sell sub-franchises within their designated territory. This allows for a quick scaling of operations and a broader market presence.
Higher Volume of Sales: Due to the larger scale of operations enabled by a Master franchise arrangement, the volume of sales tends to be higher compared to other types of franchise structures. This is mainly attributed to the multi-unit nature of the Master franchise model.
Attractiveness for Franchisors: Franchisors looking to expand into extensive territories or foreign markets often find the Master franchise model appealing. It provides a way to delegate operational responsibilities to a trusted partner while still maintaining control over the brand integrity and quality standards.
In conclusion, while Master franchises may be less common in the franchise industry, their impact on sales revenue and market penetration cannot be underestimated. The unique structure and advantages of the Master franchise model make it a potent tool for ambitious franchisors seeking rapid growth and expansion in competitive markets.