As you research franchising, you may come across master franchise opportunities. Because it can be easy to confuse the term with others in franchising, here’s a primer.
A master franchisee is essentially a mini-franchisor for a particular territory. In most franchise systems, they own and operate only a small number (or none) of the units directly. Rather, they find individual franchisees to purchase and run the outlets in their territory. In return for recruiting, training, and supporting these franchisees, the master franchisee receives compensation. This usually includes a portion (often 50%) of the franchise fees and ongoing royalties paid by franchisees.
A productive partnership
Franchisors use the master franchise method to expand more rapidly in a specific territory, often a major market. Because master franchise candidates frequently have sales and marketing experience and an understanding of the industry, the partnership is mutually beneficial. The master franchisee buys a proven system and known brand, and the franchisor benefits from the master franchisee’s existing business, contacts, and expertise.
Do you have what it takes?
Strong candidates have established management, sales, and marketing experience. While industry and franchise experience are desirable, neither is essential.
Master franchising requires significant capital, not only for the master franchise license, but also to introduce a brand into a new region. While it involves more responsibility and potentially more headaches than a traditional franchise arrangement, the rewards can be much greater. When all parties are contributing as agreed and the marketplace cooperates, income flows more quickly for everyone involved.