“The Master Franchise Concept”

Within the world of franchising, there exists a little-known opportunity that can create a fortune, known as a Master Franchise or Area Representative Franchise. It is simply the owning of the rights to develop a franchise system within a territory. This territory can be a metropolitan area, an entire state, several states or even a country. The Master Franchisee assists the franchise company in developing the territory in exchange for a share in the royalty revenues and franchise fees that are generated from operations within that territory.

The Master Franchisee pays the franchisor a fee for these rights and must provide certain services to existing franchisees within the defined territory. In building that territory, the Master Franchisee usually does not enter into agreements with the franchisees but rather facilitates the coming together of the franchisor and the franchisee. Once the franchisee has entered into the franchise agreement, the Master Franchisee may aid the franchisee in site selection, build-out, equipment acquisition, training coordination and in opening, operating and insuring quality control. For this ongoing service the franchisor pays the Master Franchisee a split in the royalties and franchise fees earned within the territory. This can represent up to one-half or more of the revenue stream earned by the franchisor within the territory.

A Master Franchise has numerous benefits over a standard franchise. Such as:

  • Franchise Fees. When a franchise is sold in your area you will receive your split of the franchise fee. Most franchise fees are between $30,000 to $50,000 or more, and in a typical situation you keep half the fee.
  • Royalties. You receive royalty income or annuity type income for the life of the franchises that are open in your exclusive territory. Usually 2% to 4% of each franchisee’s gross sales every month.
  • Low overhead. Start small and expand as you go.
  • Minimal Office Space Required. You can usually start with a home office before expanding to an outside office.
  • Very Few Employees. Typically you will operate a Master Franchise by yourself and then expand to have an administrative assistant, a trainer or other support staff or sales person. As you business grows larger you may need to add more staff. It is not unusual for Master Franchisees after having developed their area to semi-retire and spend minimal time with their business while enjoying a large substantial income.
  • Very Few Customers. Your clients are your franchisees. You help support them.
  • Building Equity. Once you sell a few franchises or open your own franchises, you significantly increase the value of your Master Franchise business. Also as other units open in other territories and the Franchisor grows, your territory may become very valuable.
  • Build a Nest Egg For Your Heirs. Pass on a substantial monthly income to your heirs.
  • More Freedom. Unlike a normal franchise, a Master Franchise allows you much more freedom. Your primary function is as a business consultant or coach to your franchisees. You usually don’t have to deal with the burden of running a unit or multiple units, but you still receive a portion of their gross sales.
  • Turnkey Unit Development. Develop turnkey units and sell them for a considerable profit and build additional royalty income.
  • Acquire Under Performing Units. You will have first hand knowledge of under performing units which you can acquire and turn around for a considerable profit.
  • Sale of Products. Distribution of specific products and supplies.
  • Sale of Additional Services. You may be able to offer other resources to the franchise network such as accounting, bookkeeping, insurance training, and/or consulting in return for additional fees.
  • Rental or Sale of Real Estate. Obtain a commission or profit on the rental or sale of properties to your franchisees.
  • Obtain Prime Locations. As a Master Franchisee landlords may offer you choice locations.
  • Financial Leverage. Leverage your income stream to develop additional units and increase the value of your territory.
  • Financing Franchisees. Finance franchisees or receive compensation from third party lenders.
  • Prestige. The prestige of owning a Master Franchise and controlling an entire area can give you tremendous satisfaction and financial leverage.
  • Prestige. The prestige of owning a Master Franchise and controlling an entire area can give you tremendous satisfaction and financial leverage.
  • No Experience Needed. In most Master Franchise opportunities you will receive specific industry training and ongoing support.

F. Steven Schneider | Franchise USA, Inc.

As an entrepreneur and franchise owner, I’ve been involved in nearly every aspect of business ownership. In 2004, I founded Franchise USA, Inc., where I take pleasure in assisting others in finding the freedom and sense of accomplishment I’ve enjoyed over a period of nearly 40 years. If you would like to learn more about me, click here.

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