Under sub-franchise agreements, a franchisee collects royalties and royalties and may be responsible for the recruitment, training and support of under-franchiseds in a given territory. Franchise sector developers or multi-unit developers agree to develop multiple units; This difference is different from the traditional franchise relationship in that the promoter of the territory commits in advance to open several units in a given territory within an allotted time. Multi-unit franchise owners, who sign individual unit agreements and continue to acquire overtime, differ from the territory`s developers, as they have not signed an agreement for additional units upstream. Subfranchising offers a clear advantage of faster growth. Although the same aspect of growth patterns and behaviours is observed as a standard franchise, the real source of faster development for a sub-franchise is the local development system that allows the franchisee master to better understand the local market. Local knowledge is therefore more defined and easy to exploit. Moreover, because of the narrower geographic distance between Denmaster franchisees and sub-franchisees, logistical support is much better. It is customary for franchisors to grant franchisees exclusive rights in certain territories in order to develop, create and operate the franchise business. In this case, the franchisor grants the franchisor the exclusive right to develop, create and operate franchised units, either directly or through sub-franchised units, within a given territory. Therefore, no other franchisee may develop, create or operate the franchise business in the territory covered by the main franchise agreement. Although franchises are created through a contractual relationship, franchises have more to consider, including brand value, franchisor support, and how the franchisee delivers products or provides services to customers in accordance with franchisor-defined branding system standards.
Franchise systems sell a master franchise (also known as a “sub-franchise”) to expand their brand and system more quickly.