Master franchising gives a degree of power to people with significant funds to start a business network, as they will be in charge of other franchisees within a specified country or region. Master franchisees basically play the role of assistant coach to the franchisor’s head coach.
Most often, especially for U.S. franchise systems, master franchises are granted for international expansion. It can be used domestically in cases of large area expansions as well.
It is a preferred method for international expansion because of the cultural differences between markets. Finding a competent master franchisee in the country the franchisor wants to expand into gives it instant local knowledge that it could have spent years learning on its own.
For master franchisees, the partnership with a franchisor provides a great way to expand his or her personal business empire. The master franchisee has access to the company's brand, business structure and access to its training and support system, but he or she also gets to retain a feeling of autonomy as he or she will have the authority to appoint, train and receive a proportion of fees from “regular” franchisees.
Before a master franchise is granted, substantial market research must be carried out across the whole country or region, as the product or service needs to appeal to consumers in a number of diversified locales.
To purchase a master franchise requires a significant investment, making it essential to ensure that everything is in place before assuming the role of master franchisee. Master franchisees also typically have sales and marketing and strong business connections already established in their communities.
The responsibility for a large area offers great earning potential, as a model is already in place for marketing the business and distributing the product. If there is enough interest from franchisees, company outlets can quickly spread and provide the franchise with a better chance of making a strong impression in the market sector.
It is important that the contract with the franchisor is straightforward and uncomplicated way so that the master franchisee knows exactly what is covered and expected of him or her. Contract issues may include how much power is given to the master franchisee, when the renewal process starts and how to go about it, and the exact territory area controlled (particularly for regional master franchisees).
It is advisable for prospective master franchisees to consult a lawyer with some experience in licensing agreements to check the contract.
In addition, master franchisees will in effect be running two separate businesses and so they must be prepared to handle the pressures of ensuring that franchised outlets are up-and-running successfully across a country or region.
A certain amount of patience is understandably required, and master franchisees must have a long-term vision, as there is a fair chance that a few local franchisees will fail to make an impact and have to close. This position is certainly very demanding, but with an excellent management structure in place and good support from the franchisor, a significant return on investment can be achieved. For master franchise opportunities, click here.