For emerging franchise brands, master franchise agreements can open doors fast. They can put local operators in charge of a region, bring capital into the system, and create a path into markets that might otherwise take years to reach. But as a concept matures, the logic can change. A structure that once helped a brand expand can later limit how tightly it manages growth, supply chain, technology, and franchisee support.
This sentiment was seen in a recent move by Gong cha. The bubble tea brand said it has acquired the rights to 170 U.S. locations from a master franchisee, bringing that territory in-house as part of its strategy to accelerate franchise development and strengthen long-term growth across the United States. The territory spans 13 states: New York, New Jersey, Pennsylvania, Connecticut, Massachusetts, Rhode Island, New Hampshire, Texas, Oklahoma, Florida, North Carolina, South Carolina and Georgia.
On its face, the deal is a territorial realignment. In a broader industry sense, it reflects a larger question that many franchisors eventually face: when does it make sense to rely on market-by-market development through intermediaries, and when is it time to control key territories directly?
Gong cha’s answer appears tied to scale. The company said it has nearly 2,200 locations across 33 international markets, more than 240 locations across the United States in 23 states, Washington, D.C., and Puerto Rico, and a goal of reaching 1,000 U.S. locations. That kind of ambition changes the development conversation. A system aiming to fill in major regions, recruit larger multi-unit operators, and refine operating economics may see more value in direct control than it did during an earlier stage of entry.
A master franchise can solve one problem and create another
Master franchise structures often make sense when a brand is still building its presence. A regional partner can move faster on the ground, source local market knowledge, and serve as the first engine of unit growth. That approach can be especially useful when the franchisor is still learning how consumers respond to the concept in different geographies.
But those same arrangements can become more complicated once the brand has a stronger corporate infrastructure. At that point, the franchisor may want tighter alignment around site selection, recruitment, store design, digital ordering, labor models, supply chain planning, and brand standards. If a company wants to recruit large multi-unit developers across several states, it may also decide that a direct relationship produces a cleaner path than working through a separate territorial layer.
That appears to be part of the logic behind Gong cha’s move. In announcing the buyback, Geoff Henry, President of Gong cha Americas, said:
“As we continue to grow toward our goal of 1,000 U.S. locations, bringing this territory in-house allows us to further sharpen our development strategy and strengthen support for our franchise partners. By engaging larger multi-unit developers, we can strengthen our national supply chain network, better manage costs for franchisees and continue improving the digital tools that power both our operations and the customer experience.”
That statement points to three themes that matter well beyond one brand. First, the development strategy becomes more precise as the system grows. Second, franchise support becomes more important as the unit count rises. Third, back-end capabilities such as supply chain and digital systems start to shape the economics of expansion as much as front-end demand does.
Why direct control can matter more in later-stage growth
A franchisor does not buy back territory rights just to redraw a map. The value comes from what the company can do next.
In Gong cha’s case, the release connects the territorial acquisition to broader investments the brand has made over the past three years. The company said it has built internal teams and systems across the Americas to simplify the business model for franchise partners and help them focus on delivering a high-quality guest experience. It also recently introduced Gong cha 2.0, a refresh of digital systems, operations, and store design aimed at improving profitability, efficiency, and scalability for franchisees while elevating the in-store experience.
That matters because direct development works best when a franchisor has something substantial to offer in return. Reclaiming territory without strong support can simply shift complexity from one party to another. Reclaiming territory after building internal capabilities is a different proposition. It suggests the brand believes it can now recruit, onboard, and support operators at a higher level than before.
The Gong cha 2.0 initiative is central to that case. According to the company, the platform includes upgraded digital systems and a new store design, while the Super Wu system, named after founder Wu Zhenhua, streamlines drink preparation and allows greater customization and personalization. In practical terms, that signals a move toward operational consistency and potentially higher throughput, two issues that matter when a concept wants to grow across both existing and emerging markets.
For franchisees, those improvements can make a direct relationship with the franchisor more attractive. A larger operator signing a multi-store agreement may want confidence that the brand controls the systems, vendor relationships and development pipeline needed to support growth over multiple years. Direct oversight can also help a franchisor align store openings with distribution capabilities and technology rollouts, rather than leaving those pieces to evolve separately across different territorial arrangements.
Gong cha’s 13-state move puts the Southeast in focus
The geography of this acquisition also helps explain why a buyback can make sense at a specific stage of development. Several of the reclaimed markets sit in the Southeast, a region that, according to the International Franchise Association’s 2026 Franchising Economic Outlook, accounts for nearly 30% of all U.S. franchised businesses and continues to lead national franchise growth.
That detail matters because not all territories carry equal strategic weight. Some regions serve as brand showcases. Some help a franchisor establish density. Others can support distribution, regional marketing, and future development across neighboring states. When a brand starts thinking at that level, it may view certain territories less as isolated development zones and more as building blocks in a national network.
In Gong cha’s case, the acquired territory includes dense Northeastern states and a broad swath of Southern markets, along with Texas and Oklahoma. Together, those markets create an expansive footprint that can influence everything from franchise recruitment to supply chain planning. Bringing them in-house gives the company more direct control over how it sequences development, who it recruits and how it supports store openings across a connected map.
That does not mean master franchise structures have stopped working. It means their usefulness may depend on timing. Early in a brand’s U.S. journey, they can reduce friction and accelerate entry. Later, they can become less attractive if the brand wants to standardize systems, negotiate at a national scale, and target larger operators who prefer direct access to the franchisor.
The right structure often depends on the brand’s stage
The more interesting lesson from Gong cha’s move is not that one model is always better than another. It is that franchising structures often fit a stage, not a lifetime.
For a younger or less developed system, master franchise rights can be a practical way to gain speed. The franchisor may not yet have the internal team, supply chain depth, or market knowledge to handle every region directly. In that context, a territorial partner can help build the first layer of presence.
For a more developed system, the priorities shift. The brand may want to densify markets rather than simply enter them. It may want larger operators instead of a patchwork of smaller deals. It may want to connect operations, technology, design and procurement under one strategy. Once those needs rise to the top, in-house development starts to look less like a power grab and more like an operating decision.
Gong cha’s announcement fits that pattern. The company is not just adding territory for its own sake. It is linking the buyback to operational investments, a new store model, supply chain coordination, digital improvements, and a stated push to recruit qualified multi-unit, multi-brand operators under multi-store, multi-year development agreements.
That combination makes the move notable. It shows that the buyback of territorial rights can be more than an administrative change. It can mark a transition from expansion through access to expansion through control.
For franchisors watching the market, that may be the most useful takeaway. At one stage, the smartest move is often to widen the tent and grow with partners who know their region well. At another, the smarter move may be to narrow the chain of command in the markets that matter most, especially when the brand has already invested in the systems needed to support that decision.
Gong cha’s latest step does not settle the debate over master franchise development. It does, however, offer a clear case study in how the calculus can change. As brands scale, the question is no longer only where to grow. It is also about structuring growth so the next wave of franchisees enters a system built for the demands of a larger network.
In that sense, buying back territory rights is not just about reclaiming geography. It is about deciding when a brand has reached the point where direct development can deliver more than delegated development. For Gong cha, the company’s release suggests that point has arrived in a significant stretch of the U.S. market, and that the next phase of growth will depend as much on infrastructure and execution as on the pace of new deals.
