What is a master franchise?
A master franchise is a type of franchise agreement in which the franchisor (the company that owns the franchise brand) grants to a master franchisee the exclusive right to develop and sub-franchise the brand in a specific territory. The master franchisee is responsible for recruiting, training, and supporting sub-franchisees in their territory.
Why use a master franchise?
There are several reasons why franchisors may choose to use a master franchise to expand their business globally. First, it can be a very efficient way to enter a new market. The master franchisee will have local knowledge and experience that the franchisor may not have, and they will be able to develop the brand in a way that is tailored to the local market.
Second, using a master franchise can free up the franchisor’s resources to focus on other areas of their business. The master franchisee will be responsible for all of the day-to-day operations of the franchise in their territory, including marketing, sales, and customer service.
Third, a master franchise can be a very lucrative opportunity for the master franchisee. They will typically receive an initial franchise fee from each sub-franchisee, as well as ongoing royalties.
How does a master franchise work?
When a franchisor decides to expand their business using a master franchise, they will first need to find a qualified master franchisee. The master franchisee should have a strong business track record and a deep understanding of the local market.
Once a master franchisee has been selected, the franchisor and master franchisee will enter into a master franchise agreement. This agreement will outline the rights and responsibilities of each party. It will also specify the territory that the master franchisee has exclusive rights to, the initial franchise fee, and the ongoing royalties that will be paid to the franchisor.
Once the master franchise agreement is in place, the master franchisee will begin recruiting and training sub-franchisees. The master franchisee will also be responsible for providing ongoing support to their sub-franchisees.
Examples of master franchises
Some well-known examples of master franchises include:
- McDonald’s: McDonald’s has master franchise agreements in over 100 countries.
- KFC: KFC has master franchise agreements in over 140 countries.
- Subway: Subway has master franchise agreements in over 100 countries.
- Domino’s Pizza: Domino’s Pizza has master franchise agreements in over 90 countries.
Master franchises can be a powerful way for franchisors to expand their business globally. By partnering with a qualified master franchisee, franchisors can gain access to local knowledge and experience, free up their resources, and generate additional revenue.
If you are a franchisor who is considering expanding your business globally, a master franchise may be the right option for you. Be sure to do your research and carefully select a master franchisee who has the skills and experience necessary to be successful.