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The parties involvedMaster franchisee
The partner granted rights to develop the brand across an entire country; they open their own units and act as a sub-franchisor recruiting and supporting local partners.
Where this sits
A franchise system involves several distinct roles. Naming each role precisely avoids misunderstandings about rights and obligations in the agreement.
In practice
This section summarises United States federal regulation (16 CFR Part 436) as published by the Federal Trade Commission. Rules change and differ by country — check the source before acting. For reference only; not legal advice.
US federal law has a name for this role. 16 CFR 436.1(k) defines a subfranchisor as "a person who functions as a franchisor by engaging in both pre-sale activities and post-sale performance" — recruiting partners and then supporting them — and folds that person into the definition of franchisor.
The practical reading: a master franchisee sits on both sides at once. Franchisee to the brand owner, franchisor to every partner it recruits. Before signing, the question worth asking is not only what territory you get, but whether you are staffed to carry a franchisor's obligations toward the partners you will sell to.
Source: 16 CFR § 436.1(k) — Definitions · Reviewed: 2026-09-02