Expand Your Franchise Via Master Franchising

Most franchises choose one of two ways for providing sales and support services to franchisees: directly by the franchise company to the individual franchisees (known as direct franchising) or via a master franchisee. World Franchises advises clients to expand their networks through master franchising  in order to expedite the return of their franchise development investment, and facilitate more rapid system growth with less initial capital risk for the company.

Master Franchising - The Ultimate Franchise Business Model.

Master Franchising is a one of the best kept secrets in the franchise industry today. If the franchise is expanding via master franchisees, it means they've contracted with a person or entity to provide services to franchisees in a specified territory (typically a major market or even one or more states). The master franchisee helps the franchise by recruiting franchisees. The master franchisee typically pays the franchise company a significant initial fee for the rights to develop the territory and then retains most or all the initial fees and royalty fees paid over time by the individual franchisees in the territory. There may be additional income available from distribution of products through the franchisees in the area and possibly some real estate interests in franchisee locations. The master franchisee will usually operate at least one unit for income generation, for use in franchise sales, and for use as a training facility.

Not every franchisor offers master franchising opportunities. Master franchises are rare, and when they are available, they are usually sold quickly. Because of the multiple revenue streams associated with a master franchise, the potential return on investment is substantial. Franchisors that do use this system of expansion usually grow very rapidly. The master is usually responsible for recruiting the individual franchisees and providing all training and support they need, both initially and on an ongoing basis.

Master franchises are suitable for investors with sufficient financial resources to develop a network of franchises in a specified country or region. Candidates for master franchises include existing industry franchisees and multi-unit operators looking to diversify their market mix while controlling management functions centrally. Initial master franchise fees typically range from $50,000 to over $1 million, depending on territory size and other factors. Territory size varies based on the nature of the business.