o operate all stores directly, it expedites the expansion process. Master franchise arrangements are among the most popular form of international franchising ("What is Franchising?" 2001, p. 1). The differences between master and traditional franchising are detailed on page seven.
Under the joint venture, the franchising company works directly with local operators to develop operations. To some degree, the master franchisee arrangement is a special form of joint venture where the master franchisee is granted the right to subfranchise any, all or none of the operation. This is not true of joint ventures. In addition, the joint venture may involve multiple relationships between the franchising company and other organizations, whereas master franchisees are granted exclusive rights to a particular country or region (Tomzack, 1995, p. 73).
Licensing agreements permit specific entities to use a product, trademark or other trade asset in return for a royalty fee. The benefit to the franchisee in this arrangement is that there is no research and development cost, and the franchisee also benefits from the reputation of the franchisor. The franchisor benefits from having little exposed risk in the arrangement (risk is transferred to the franchisee or licensee) and the franchisor is able to enter markets more quickly than if a master franchise arrangement were developed (Chan & Justis, 1990, p. 78).
The fourth type of common franchise arrangement is that of direct inv
...