Master franchising is a version of franchising in which the master franchisee takes on many of the responsibilities of the franchisor in a specific territory, in exchange for the brand name and resources that the franchisor provides.
Master franchising is a mutually beneficial for the franchisor and the master franchisee, both of whom profit from this method of fast expansion. Learn the details of master franchising in this blog, and see how this may be a good large scale investment for you.
Learn the LingoFirst things first: to understand the master franchise process, you need to understand the terms that we will be using.
- Franchisor: The owner of the brand name and trademarks.
- Master Franchisee/Subfranchisor: A person or entity subcontracted to sell franchises in a specific territory.
- Sub-franchisee: A person or entity who purchases the rights to own and develop a franchise from a master franchisee.
Responsibilities of a Master FranchiseeIn a nutshell, the master franchisee’s responsibilities are similar to those of the franchisor in a direct franchising model. That means that the master franchisee is the one who finds, trains, and supports sub-franchisees, providing the resources and assistance that the franchisor typically provides.
RecruitingIn order to expand their businesses, master franchisees are responsible to find and qualify sub-franchisees within their territories. Recruiting suitable sub-franchisees is an important job, as their success and earnings translate directly to the master’s success and earnings.
TrainingOnce sub-franchisees are chosen, it is the responsibility of the master franchisee to train them in the business. As part of a franchise system, there will be specific computer programs, systems, and products/services that the sub-franchisee must follow, which are necessary for the sub-franchisee to follow.
SupportingOne of the biggest selling points of a franchise is that the franchisor supports each owner through the life of the business, with everything from solving problems to rolling out new products. Because the master franchisee acts in the role of the franchisor for his or her territory, this support comes from the master franchisee.
Large Scale Investment, Large Scale ReturnBecause the master franchisee is the one doing most of the work with the franchisees, he typically receives a high percentage of the franchise fee and ongoing royalties. This means that this growth method benefits the franchisor and the master franchisee at the same time.
There is significant financial gain available to the master franchisee who finds qualified sub-franchisees to open units in the specified territory. As the number of units in the territory grows, and as these units become successful, the more that master franchisees earn. This incentivizes master franchisees to find qualified, hard-working sub-franchisees to help expand their territories.
The return on this franchise model benefits the franchisor, the master franchisee, and the sub-franchisee.
Traits of a Master FranchiseeDo you have what it takes to be a master franchisee?
Though not every candidate has the same qualifications, it is important to note that master franchising requires hard work, dedication, and ambition. These are some of the traits that most franchisors look for in master franchisees:
- Business and infrastructure already in place
- Sales experience
- Marketing and advertising experience
- Contacts with financial institutions
- Management skills
- Ability to delegate responsibilities
- Training experience
- Bonus: industry experience
Master franchising can be an extremely lucrative investment on a large scale. Many American companies use master franchising as a way to expand internationally, and master franchisees offer local expertise that companies cannot get elsewhere. This type of investment can prove to be a win-win for both franchisor and master franchisee.
Senior Helpers is an American caregiving franchise that is currently expanding worldwide. Learn about our global opportunities for master franchisees.