I think there might come a time where the imprints (Squier, Sterling, and Epiphone) surpass the quality and craftsmanship of the marquee brands (Fender, Ernie Ball Music Man, and Gibson, respectively).
This will cause one of two (or more) things to happen:
1. The marquee brand spins off the imprint into a separate brand, such as Squier removed any reference to Fender, Sterling removing any reference to EBMM, etc. This would make the imprints full on sub-brands, which would also house R&D and maybe lead to new designs and concepts for those manufacturers, all while the marquee brand retained control. I don't think Squier, Sterling, or Epiphone will ever be wholly separate companies, but then again, I don't know anything about business.
2. The marquee brands will start to bring down the quality of their imprints to maintain the justification for the pricing of the marquee brand instruments. This could be the introduction of inferior woods, components, craftsmanship, or all of the above at once. Going this route would reverse the pattern of the imprint brands gaining market share due to increased quality and perception that the "budget brand" is actually a good value compared to the marquee brand. This could in turn hurt sales more abruptly, but I think that would depend on what kind of quality changes were made and how quickly they were made. If the changes are slow and few, the public may not notice, but all of a sudden and people will notice that one model year over another is quite different, which could possibly lead into buyer push back and other consequences.
3+. Something else that I can't think of because I don't understand business very well will happen.
I don't think Fender and EBMM can keep making instruments of improving quality under their imprint brands without starting to see an encroachment on the sales of their marquee branded instruments. Sure, a buck made on an investment of twenty five cents is great, but when those sales start to eat into marquee branded instrument sales, the big question is--how long will Fender, EBMM, and Gibson allow that to happen before they put an end to it?