What is a Master Franchise?

Master franchisees typically purchase the rights to develop and own an exclusive territory (typically a major market or region), and then sell portions of this territory to new franchisees.  Master franchisees then function as a ‘sub-franchisor’ and split the roles and responsibilities as well as the franchise fees and ongoing royalties with the franchisor.

What are the benefits of becoming a Master Franchisee?

Master franchisees are drawn to the potential for significant financial gains in a business with low overhead and few employees needed.  However, that is not the only reason to investigate this opportunity— master franchisees enjoy the benefits of an improved quality of life by owning their own business with exclusive territory rights, and the opportunity to grow as quickly as they want leveraging the capital and full time management of their sub-franchisees.

• Low Overhead: Especially in the beginning, master franchise operations can be run with little office space or from a home office. Typically, you will operate the master franchise yourself, and potentially add just a few support positions to aid in your growth such as an administrative assistant, a franchise sales manager, or a field training and marketing manager. Once you reach a certain level of growth and success, you may opt to hire a district general manager to manage much of the operation.
• Few Customers: Your franchisees will be your end customers. You will support a limited number of franchisees in your master territory. Your franchisees will support a large volume of customers in their daily operation.
• Wealth Building: Master franchising offers an unparalleled opportunity for financial growth in the franchising industry, versus individual franchise operation or even multi-unit development businesses.

What type of support does the corporate franchise office give Master Franchisees?

Typically, the franchisor provides the master franchisee with ongoing innovations, business expertise, training and operating guidance, rights to use proprietary brand names and trademarks, technology and purchasing advice, and other business building support effectively making them a mini-franchisor.

Learn how Boardwalk Fresh Burgers & Fries is expanding via master franchising with experienced franchisees at the Fransmart Blog.

What is a Master Franchisee responsible for?

Master franchisees are responsible for the recruitment, qualifying and sales of individual franchisees in your master territory. You will also provide certain training, marketing, real estate, and purchasing support. You will act as an ongoing business coach to your franchisees to help them succeed, and in turn grow the value of your business and royalty stream.

What do we look for in a Master Franchisee?

In certain circumstances, we will award master franchises to experienced and capitalized groups who want to share with the franchisor at a local or regional level in the franchise fees, royalties, and roles and responsibilities of building and managing a territory.

• Master franchisee must demonstrate success as a multi-unit owner/operator with the highest of standards
• Sell and support sub franchisees under you
• Markets that can support at least 50 units

Sample Worksheet for Master Franchising:

1)      Master Franchisee opens FLAGSHIP store. May own/operate more units.

__ units x $___ volume/each = $____ total sales x __% profit = $______ Profit

2)      Master Franchisee sells and supports sub-franchisees earning half the franchise fees and royalties:

Franchise Fees:

___ number of franchises x ___­­­­ franchise fee = $_____ x 50% goes to Master =

$________ (take this number, and plug into formula below)

$______ - expenses = $___ profit from franchise fees

Royalties:
____ number of units x $___ volume/each franchisee = $____ system wide sales x ___%

royalties = $____ royalty revenue x 50% split with franchisor = $_____ master

franchisees cut x __% expenses = $___ master franchisee profit

This worksheet is for information purposes only. A franchise offering can only be made by prospectus.