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What Is a Master Franchise?

What Is a Master Franchise?

Indeed, what is a master franchise? Perhaps you have been thinking about the same question. What can it do for your existing franchise business? Should you aim for it instead of just a regular franchise? Read on and find out.

Master Franchise Defined

The Global Negotiator Dictionary states that a master franchise is an arrangement where the franchisor grants one franchisee the right to appoint sub-franchises in a specified geographical area.  It can be a sign of a growing franchise business because, through it, a franchise business  can expand in a fairly short period of time. Master franchising can be the simplest structure for expanding the business either locally or overseas. In simpler terms, the master franchise can be the bridge between the franchisor and the rest of the sub-franchisees in a certain location where support can easily be disseminated.

Master Franchisee Responsibilities

The master franchisee serves as the “mini-franchisor” or sometimes called “sub-franchisor “ in a certain area as it bridges the franchisor-franchisee relationship. Thus, he has a lot of tasks to fulfill. One responsibility as mentioned by Entrepreneur is to recruit individual franchisees (or sub-franchisees) specified in a certain geographical region. Added to this, the master franchisee needs to provide the support, training, communication, quality control, etc. needed by these franchisees most especially at the onset of the business and as the business goes on.

Consequently, the master franchisee should see to it that the sub-franchisees can be self-sufficient in their operations as well as enhance their ability to manage their  day to day issues.  Expanding on these responsibilities, AllBusiness.com explains that the master franchisee essentially maintains 2 business operations simultaneously as he operates his single franchise and the expansion via the sub-franchisees. A master franchisee also takes on a supervisory role, as one makes sure that the sub-franchisees are complying with the rules and the terms of the contract. This means that the master franchisee is always ready to give sales, marketing and other financial advice and management suggestions.

Choosing the Right Master Franchisee

A master franchise partner normally has an existing business. He also has an experience in sales and marketing and contacts with other businesses in the area. He then has to pay the franchise company a significant initial fee for the rights to expand in the territory. Sometimes, when the franchisor feels it is time to expand in a certain promising location and the franchisor will not have the time to directly run the expansion, he can choose the most equipped among all the franchise partners and offer the master franchise to him. There are also instances wherein the initial franchise agreement starts with the master franchise most especially if the area is a new venture for the franchise company.

According to Franchising.com, in exchange for all of these, “…master franchisee receives a large percentage of the initial franchise fee and ongoing royalties, typically 50 percent, although it varies.” In addition, the master franchisee has to agree on a development schedule and other details that need to be discussed with the franchise company.

Conclusion

The master franchise opportunity may seem like a big responsibility. But for the right candidate with the management expertise and business skills, it is an opportunity to expand your business and empower yourself. If you partner with a credible and a stable franchise company, it will be the best partnership you can ever wish for. Do you have what it takes to be the master franchisee in your area? Check out the DetailXperts opportunity.

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