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What does the term ‘multi-level franchising’ mean?
Multi-level franchising first came about when franchisors began to take their offer to other countries, where they would appoint a Master Franchisee who in effect became the ‘franchisor’ for the country concerned, and was responsible for recruiting and training his own (sub-)franchisees, having been shown how to do so by the franchisor. The sub-franchisees pay fees to the master franchisee, who in turn pays a percentage of their income back to the franchisor. In the last few years, some franchisors have started to operate multi-level arrangements within a country - offering regional or area franchises to people who then recruit and monitor their own unit franchisees. Regrettably, this is often done to increase the number and amount of upfront fees available and to save the franchisor the bother and expense of recruiting and paying trained support staff. I’d say the jury is still out as to whether it is appropriate (or necessary) in a geographically small country such as the UK.
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