Is a Master Franchise right for you?
Owning a Master Franchise is very different to being a franchise owner, often requiring a much higher level of dedication but also producing higher results.
The commitment needed to be a Master Franchise owner is much greater than that of a single unit franchise owner. One of the main reasons for this is that a Master Franchise owner will own a much larger business than a franchise owner.
Whereas franchise owners normally open one location and will perhaps build their business by opening a second unit, a Master Franchise owner will own the franchise network for an entire country. To ensure that the owner of a Master Franchise is prepared to launch multiple units, the franchisor will usually specify a minimum number of locations to be opened within a specific timescale in the agreement.
Due to the Master Franchise owner's obligation to open a number of locations, they will normally own and operate a pilot location and then recruit a network of franchise owners to operate further locations. The Master Franchise owner will be responsible for managing the franchise network and will usually have to provide support and training to franchise owners (although sometimes this is done by the franchisor), as well as being responsible for recruiting quality franchise owners to the network.
Part of the franchisor's role is to ensure that the Master Franchise owner has all the skills, knowledge and back-up needed to provide effective training and support to its franchise owners. To prepare Master Franchise owners for this the franchisor usually provides them with thorough training that ensures they are competent in all aspects of the business.
Normally a Master Franchise owner is sought by foreign brands looking to expand their franchise into a new country. As a result the Master Franchise owner will be bringing an entirely new brand into their market. Before a franchisor makes a Master Franchise available they will have ensured their concept is successfully franchised throughout their own country and will sometimes initially start franchising abroad themselves to ensure the concept works internationally.
More often than not, although the basics of the franchise model are kept, when a franchise is entering a new market small adaptations are made to ensure that it suits the market. The Master Franchise owner will usually have some influence on these changes, and as a result will have more control and say into how the franchise is operated than a single unit franchise owner would have.
Additionally, a Master Franchise provides more opportunity to establish a growing business. This is because a Master Franchise agreement often only states the minimum number of locations to be opened, which enables the Master Franchise owner to establish as many locations as they feel will be successful within their territory.
Not only is a Master Franchise more expensive than a single unit franchise, but franchisors are also more restrictive in the type of candidates they want to apply. This is because a franchisor will want to make sure the Master Franchise owner has the financial backing, experience and qualifications needed to establish and support a growing franchise network. The higher investment levels and skill sets most franchisors look for in Master Franchise owner candidates means that they are usually owned by already established companies, business partnerships or highly experienced entrepreneurs.
Although the demands on a Master Franchise owner are much greater than that of a franchise owner, there are many benefits to owning a Master Franchise including a greater say in the franchise model and ability for business expansion. Therefore, for the right business or entrepreneur, owning a Master Franchise could be the new business opportunity they are looking for.
Reported by Derin Ibrahim