Master franchising allows the franchisor to take on responsibility beyond the typical multi-unit franchisee. The master franchisee becomes more of a partner to the franchisor, combining both the roles of franchisee and franchisor. Thanks to franchising.com, we offer you the basics of a master franchisee.
What is a Master Franchisee?
The master franchisee acts as a mini-franchisor for a specified territory. The franchisee receives a large percentage of the franchise fee and royalties. In exchange, the master franchisee will recruit other local franchisees and take on the responsibility of training and supporting the recruits. To sum up, he or she will receive more financial benefits, but take on extra financial burdens and responsibilities within the territory.
US franchisors most commonly use master franchisees when they want to expand internationally. This is because there are usually major cultural differences and insufficient infrastructure. It take a lot of time and effort to launch overseas, so finding a master franchisee relieves much of this burden. If expanding in the US with a master franchisee, it typically serves the purpose of expanding rapidly in a populous territory. The more franchisees the master franchisee recruits, the more money he or she makes, so there is a major incentive to obtain plenty of recruits. That being said, they also have an incentive to only recruit those qualified, because they are responsible for training and support.
- Proven system.
- Known brand.
- International marketing.
- Access to franchisor’s systems and technology.
- A partner very interested in the franchisee’s success with plenty of informational resources to offer.
- Benefits from the franchisee’s existing business and contracts.
- Franchisee offers local expertise.
- Quickly penetrate market.
- Gain brand dominance within region.
Mutual Benefit: Both are using someone else’s money. Recruited franchisee pays the franchise fees for their location, and the master franchisee typically receives 50% of the fee.
Master Franchisee Qualifications
Not just anyone can be a master franchisee. It requires significant money and experience.
- Management and organizational skills.
- Own an existing business or infrastructure.
- Sales and marketing experience.
- Experience in the industry or franchising in general.
- Significant capital.
- Contracts with local financial institutions.
It’s not easy to be a master franchisee, but the benefits can be great. Master franchising offers a unique opportunity for both the master franchisee and franchisor. It positions the company for great success in a region, while the master franchisee reaps rewards beyond that of an ordinary franchisee.