← Business Models: Industry Specific (Consumer, Services & Financial) (all topics)
Franchise & asset-light - QSR master franchise
What it is
An international brand grants exclusive rights for a country or region to a local operator, who builds and runs outlets and pays a royalty on sales plus committed store-opening targets
Most global QSR brands operate in India this way rather than through direct ownership
Impact on industries
- Gives the local operator a proven brand, menu system and operating manual without the cost or risk of building brand equity from scratch
- For the brand owner it is capital-free expansion earning a royalty annuity, with local execution risk carried by the franchisee
- Royalty is charged on sales regardless of profitability, so it is a fixed claim on revenue that bites hardest when SSSG is weak
- Development commitments force openings on a contractual schedule rather than market conditions, and menu and format latitude is limited by the brand owner