Things to keep in mind before becoming a master franchisee

Posted by franchise-law on May 9th, 2019

A master franchise is a franchising contract in which the franchisor hands over the control to the franchising activities in a territory to the person known as Master Franchisee. This method is that has been employed by most of the franchising systems. The operational efficiency of Master franchising system is they are distinctly complex organizational form. They provide benefits from the increased growth rates of the subfranchises. Master Franchisee is responsible for attracting, screening and signing all the new franchises within the territory. In several cases, these territories are extremely extensive and this is why a master franchisees role is very dynamic and challenging.

What are the responsibilities of a Master Franchisee?

The Master Franchisee buys the developmental rights of an exclusive territory. The amount needed actually varies from franchisor to franchisor as well as territory to territory. These are often tied to the territory population as well as the number of potential units a specific territory can accommodate. They have to invest time and money into the system, manage the sub-franchisee by providing appropriate guidance and training to educate them. Educating and understanding the whole business plan is one of the main responsibilities as Master Franchisee acts as a franchisor for the sub-franchise. An additional investment needs to be opened at least one franchise unit in the territory. This unit will provide the opportunity and potential to generate a revenue stream, provide a field training location and validates the business model.

The primary responsibility is to facilitate the sale of franchises to all the qualified and prospective buyers. They can sell the units on their own or in conjunction with the broker network but in all the cases the franchise company will provide assistance in each and every step. The overall responsibilities of establishing this business to all my stakeholders, expectations which includes the goals. The franchisees who have invested in the franchise network are the key responsibilities as the master franchisee is responsible for developing the territory.

Rewards

A Master Franchisee generates income with various ways are expanded over the normal franchise. In a normal franchise product or service is directly offered to the end-customer such as retail store whereas a master franchisee can generate income through their own stores with a significantly reduces royalty and franchise fee. The rewards and Return On Investment(ROI) is overall a three-fold process. When a franchise is sold in their territory the Master Franchisee receives a percentage of the franchise fee. They also share in the monthly royalty revenue each franchisee pays to the franchisor.