The master franchise business model is a relationship between three parties: the franchisor, the master franchisee and the franchisees recruited into the network. As a sort of “middleman” between the franchisor and franchisees in a given location, the master franchise characteristics include the ability to recruit and train franchisees and help them develop their own territories, look after the dedicated territory, and manage the fees paid to the franchisor.
Consequently, if you are wondering how master franchising work, it’s important to understand the relationship between the three parties. A master franchisee is allocated a much wider set of rights to develop the franchise brand in new markets than a franchisee is. This may mean that a master franchisee may need to conduct their own market research into the new location and carefully study the legal regulations of that territory to ensure full compliance with the laws there.
The primary difference between a master franchise and a single franchise lies in the responsibilities that each parties have and the duration of their agreements.
Master franchisee, as a sub-franchisor for a certain country (for example) will be responsible for recruiting and training new franchisees to come on board and run their own individual units. Franchisees, on the other hand, are simply responsible for running their units and delivering the products or services of the franchisor.
In terms of agreement length duration, a master franchisee is in it for the long term. This can mean anything from 15 to 20 years. Meanwhile, a franchisee can join a franchisor for a period of three to five years, in many cases, with the option to extend.
A successful master franchisee can be defined as one that possesses a combination of relevant industry experience as well as personal characteristics. Generally, industry experience such as running or managing a business before will come in handy. However, personal qualities are very important for a master franchisee’s success. These include having passion for the brand, being entrepreneurial in nature, being a visionary, being honest, trustworthy and reliable, having a strong work ethic, having adequate financial resources to expand the business, flexibility, communication and dedication, a team player, someone with a good reputation in their country, and others.
The master franchise investment entails a significant commitment. These individuals are expected to commit to the parent brand and expand it for a period of up to 20 years (or more). In addition, they will be required to invest their energy and time into training new franchisees. Hence, a master franchisee’s investment is not only determined by monetary means but also time and other resources as well.
Becoming a master franchisee is not for everyone. To know whether you are ready for this major leap, you will need:
The average cost of a master franchise will be calculated based on factors such as:
Our portal provides thousands of free materials to help you achieve success in the long term! Download now.