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Small Business Resources > What is a Master Franchise?

What is a Master Franchise?

What is a Master Franchise?
A master franchise is a form of franchising that enables business owners the right to sub-franchise within a specified geographical area. Through this concept, a master franchisee manages a single franchise while at the same time increasing the business by introducing other outlets into the allotted territory.

Role of the Master Franchisee
The master franchisee should enter into this role with both sales and management experience, since he or she will not only operate a unit, but will also be responsible for the smooth operation of several other locations as well. Additionally, a master franchisee holds the responsibility of obtaining and educating other franchisees. He or she needs to be available for continuous support for the other franchisees.

Pros of Master Franchising
This particular form of franchising offers the opportunity for the franchisee to participate in a business model that has already been proven successful. Also, rather than being alone in a business venture, the master franchisee usually receives continuous support and training from the experienced franchisor. Further, the franchisor typically passes along up-to-date technologies that can be useful in building the business.

Another advantage of becoming a master franchisee is that it is possible to hire skilled employees to help you manage your business while you continue to work at another position or operate another business.

The main benefit with regard to master franchising is that it is possible to build a decent business much more quickly than with traditional franchising. These franchisees have the advantage of earning a portion of not only the initial startup costs, but also obtaining continuous royalty payments from the franchisees within the master franchising organization.

Cons of Master Franchising
One possible drawback of entering into master franchising is that the initial costs are usually quite a bit higher than investing in a regular franchise.

Another possible disadvantage is that there may be a great deal of extra time and resources involved in getting the master franchise organization up and running. Also the master franchisee must have great sales and management skills as well as organizational and multi-tasking skills in order to be successful.

What to be aware of before becoming a Master Franchisee
As with any business opportunity, research the possibility thoroughly before investing. Read all documentation and master franchise information with the assistance of financial and legal professionals. Also make sure to pay a visit to several of the franchise locations to see how they operate firsthand. It is also wise to speak with other master franchisees to understand how the entire concept works and find out if they have experienced any pitfalls that you would be able to avoid.

By and large, master franchising can be a very nice business opportunity, creating quite a decent income. However, it is important to find the best match for your skills and interests so that you have the highest chance for success.

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