Master franchising gives a degree of power to people with significant funds to start a business, as they will be in charge of the other franchises that are established in a specified country or region.
This middle stage can be an excellent education in business management and can be very successful if the processes are done properly, but there is more to lose if things go wrong.
Master franchisees will not only be given the company's structure and access to its training and support system, but they will also have the authority to appoint, train and receive a proportion of fees from their unit franchisees.
The responsibility for a large area offers a 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.
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.
- Substantial market research needs to be carried out across the whole country or region, as the product or service needs to appeal to consumers in a number of diverse places.
- It is important that the contract with the franchisor is presented in a straightforward, uncomplicated way so that the master franchisee knows exactly what is covered and expected of them.
- Contract issues may include how much power is given, 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 to consult a lawyer with some experience in licensing agreements to check the contract.
- Master franchisees will in effect be running two separate businesses, 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 concentrate on the long-term, 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, master franchisees can achieve a significant return on their investment.