Both the franchiser and the master franchisee are big winners in this relationship. The franchiser now has the ability to expand its brand much more rapidly and efficiently, as opposed to awarding one franchise at a time. The master franchisee enjoys several benefits as well, including some listed here:
Ongoing Royalties. As the master franchisee, you are now receiving a portion of the royalties from all of your franchisees within your territory, which enables you to draw very significant long-term residual income. This is the ultimate income source. Once you assist with setting up your franchisees, you receive royalty income for the rest of the life of those franchises. Can you see yourself receiving 3%, 4%, even 5% of your franchisee's volume each month?
Very few employees. Normally, you begin your master franchise by yourself. As the number of units increases, you may expand and hire an administrative assistant, a trainer, or another support person and possibly a franchise sales person to help manage the growth. Some master franchisees, after devoting several years to building their business, choose to semi-retire and live off of an extremely attractive residual income. Or, perhaps you may want to take advantage of the inherent flexibility to work on a new business venture. This may be an appealing scenario for others as well, depending upon the success of the business and the preference of the master franchisee.
Low Overhead. You won't require a large office, staff, and other expenses because your main role and focus is to sell your concept. Meetings with potential franchisees are easily conducted in a home office, which, in itself, offers even more advantages, when you consider the tax benefits of this set-up.
Few Customers. You won't be required to deal with hundreds of customers as a single-unit franchisee might. In this arrangement, you'll be dealing with your franchisees, who are your true customers.
High Prestige Business Model. The prestige enjoyed from your role as a master franchisee and controlling an entire territory provides great satisfaction. Your main role will be that of a business consultant to your franchisees and showing them how to succeed in their own franchise. You will be associated with the recognized and respected brand name of the franchise as the main developer of a specific area.
The overall success rate of a master franchisee is extremely high. Of course, this business type is not for everyone, as a significant investment is required, much more than for a single unit. You're purchasing the rights to your own "corporation", and there is huge potential in the way of income and profitability. A qualified franchise consultant can help you evaluate the opportunities available to you, based on your specific requirements and background.
Cory_Barber
2 comments:
The reason master franchising works is that it creates a win win scenario for both franchiser and the master franchisee. By allowing its concept to be sub-franchised and developed by qualified individuals broken down by territories, the franchiser can often grow its system much faster and more efficiently than trying to sell single units itself.
With the help of Master franchising one can able to build decent business much faster as compared to traditional franchising.
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