In cases where a franchise brand has matured into a successful and well-known business in its own country, the franchise will want to expand internationally, but may not have the skills and workforce required to succeed in their targeted area. In cases such as these, the franchise will often sell a master franchise, granting exclusive rights to that country to an individual or company: a master franchisee.
With Master Franchises, an agreement is signed whereby the master franchisee is put in charge of a franchise brand’s operations over a vast area, such as a country or large province. Some master franchisees will take the exclusive rights to a massive territory and will use this exclusivity to build up a series of branded businesses which they wholly own. The cost of operating in this manner can often be prohibitive, so the more popular option is for a master franchisee to divide up the territory they have purchased into smaller franchise territories, which are then sold on to individuals. The master franchisee then has a responsibility to support existing franchisees and recruit new franchisees, taking a percentage of earnings from every successful branch that they set up under the master franchise licence.
Master franchises tend to carry a much higher price tag than the usual ‘owner operator’ franchise opportunity, and require a great deal of business experience to ensure that the greater responsibilities can be met. The master franchise takes on the duty of representing the brand in their country or territory, which requires an ability to work at a corporate level. The master franchisee will usually have to manage and advise multiple stores or premises at the same time, meaning a lot of time spent out on the road meeting people face-to-face.
Master franchising is a challenging business, and it requires lots of experience, capital and a keen eye for opportunity. You need to be an excellent communicator, with polished sales skills and good commercial judgement. You also need to be sure that the master franchise you take on is going to match your ambitions for growth.
If you would like more information about franchises, you can get expert help and advice from our Franchise Guides.
