Master franchising adds another layer to the relationship between franchisor and franchisee.
Master franchisees act as franchisors for a specific territory and take on the responsibility to recruit, train and support new franchisees within that area. Franchisors will look for master franchisees to be responsible for new territories, often in a quest to grow internationally.
The extra responsibility provides substantial reward for master franchisees. For each franchise sold within the contracted territory, the master franchisee receives a percentage of the royalty fees and initial franchise fee.
Exploring the triangle: Everybody wins
Through the cooperation of all three parties – the franchisor, master franchisee and franchisee – the franchise brand will grow, the reach of the business will expand and ultimately the business will be more successful.
With master franchisees, franchisors can expand their business across international territories. Franchisors will often leave the responsibilities for a new territory with the master franchisee, to save themselves time and shrink the task of growing their business.
Master franchisees are happy with this arrangement, because more responsibility means greater financial reward. Master franchisees buy into a proven business model and brand. Often they will also have a good cultural understanding of their territory, which means that they are best placed to find local suppliers, employees etc.
Franchisees still win in this arrangement, as they will have the support and expertise of the master franchisor, whilst still benefiting from the standardised business model set out by the franchisor.
The master franchisee will be keen for business to boom within the territory and all going well, revenue will flow faster to the benefit of the franchisee, master franchisee and franchisor.
What makes a great master franchisee?
The ideal master franchisee will have proven business skills and usually, significant capital ready to invest. The franchisor will expect the master franchisee to grow and establish the business fast.
Is important for the master franchisee to have the following skills:
- Organisation and managerial skills to keep on top of the various responsibilities within their territory
- Passion for success to drive the business forward
- An understanding of marketing, sales and operations (the level of understanding may vary, depending on how much the support the franchisor is willing to provide)
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