A Master Franchisee can also be known as a sub franchisor or Master franchisor. Whichever term you choose to adopt, be consistent with the usage in your organisation to avoid confusion.
Master Franchising allows people or corporations to purchase the rights to sub-franchise within a certain territory. This allows the Master franchisee the opportunity to grow a viable business in a fairly short timeframe.
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.
Here's how it works:
A Master franchisee helps the overall franchise company by recruiting franchisees to open units within a specific territory. The Master franchisee purchases this specific territory from the franchisor and then shares in the revenue from franchises in that territory.
For example, your Master franchise agreement with the franchisor may state that you will receive 50% of the franchise fee and 50% of the royalty fees for each unit sold within your territory. You will be responsible for recruiting and training other franchisees. You will also need to be available for ongoing support.
NB this is not a percentage we are suggesting, we are merely using this figure as an example.
Purchasing a Master franchise offers an investor the opportunity to partake in a business concept that has already been fully developed. In addition, by partnering with the larger entity, the Master franchisee receives support and expertise as needed from the franchisor as well as access to new systems, products and general business initiatives.
The Franchisor is able to relinquish day to day responsibility for regional areas as determined by the Master Franchisee's territory.
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