As a franchise sales consultant I am often asked what are the advantages of the master franchising business model and buying a master franchise. Master franchising, some times referred to as sub-franchising, is a form of franchising that allows an individual to buy the rights from a franchise company (The Franchiser) to sub-franchise their business concept in a specific territory or large geographical area. In general the individual or master franchisee’s goal is to sell and open a pre-determined amount of franchise units in his or her specific territory. The master franchisee benefits from populating his territory with new franchise locations by receiving a share of the franchise fees and royalty fees generated by each unit opening and operating in their designated territory.

The reason master franchising works is that it creates a “win win” scenario for both franchiser and the master franchisee. By allowing its concept to be sub-franchised and developed by qualified individuals broken down by territories, the franchiser can often grow its system much faster and more efficiently than trying to sell single units itself. The master franchisee in return can also benefit in numerous and significant ways from this arrangement including the following below.

Residual Income: The ability to develop a residual income stream is in my opinion the most attractive benefit and number 1 reason to buy a master franchise. Although all franchise agreements are slightly different, typically the master franchisee and franchise will split the royalty fees (typically 5 to 7%) generated by the units opened in the master franchisees territory. Imagine getting a nice fat royalty check every month based on the gross sales from all the franchise units in your territory you sold. This is a personal income stream that can potentially last a lifetime!

Franchise Fees: With most master franchising agreements when you sell a franchise unit in your territory you typically receive a franchise fee or commission from the franchiser for your efforts. These fees tend to range anywhere between $15,000 to $30,000 and generally most franchise agreements allow you to keep all or most of it!

Low Overhead: Because being a master franchisee at the end of the day is a “sales job”, there is no real need to rent or lease a retail office space. You can in most cases easily start out in a home based office and accrue all the benefits and flexibility that option offers including low overhead, no commute, generous tax deductions, more personal freedom, and a better lifestyle.

Few Employees: Most master franchisees typically start out as a 1 person owner operated business. Once the business reaches a certain critical mass regarding number of units sold or operating, you may in some cases find it advantageous to hire some support staff such as an administrative assistant or sales assistant to keep the business growing and running smoothly. In general however, most master franchisees don’t have a lot of employees and all the headaches and costs associated with having a large staff.

High Success Rate: As with all franchise businesses, master franchises generally enjoy a very high success rate. Keep in mind however that not all master franchising opportunities are alike. It’s important to make sure that you adequately investigate and research any franchise opportunity before moving forward. As part of your due diligence I would ask the franchiser if you could speak with an existing master franchisee in their system to get some feedback on their experiences.

About the Author:

Ray Haiber is a franchise sales consultant and the founder of AZfranchises.com, a franchises for sale directory. You can research and view research master franchises for sale in the USA here including fast food, automotive, senior care, and home based opportunities.

• 0 Comments

  

Comments

 Add your own comments

Name:

Email Address:

URL:
Remember Me? YesNo

Comments: (you may use HTML tags for style)

What next?

 Digg it

 Save This Page

 Subscribe to GetEntrepreneurial.com

 Leave a comment

Next Article: Contests for Every Entrepreneur »

Previous Article: How to Launch a $100K+ Executive Level Job Search Campaign That Gets You Hired in a Recession »

Steven Teo is a GE Network Expert. View Steven Teo's profile or read more articles from Steven Teo. Learn more about the GE Experts Network.

Have an expert opinion on issues entrepreneurs and small business owners face everyday? Join the GetEntrepreneurial.com Experts Network and share your expertise with the community!

The new GE Experts Network is inviting seasoned entrepreneurs and small business owners to come on board and contribute small business advice to our community of aspiring entrepreneurs. If you have an effective way of generating sales or you know how to use social networking to connect with your customers, join us in providing wider entrepreneurial content that would benefit small business owners worldwide.

Click Here to Learn More >>

Related Articles

 Ooh Local Activities » If you can find and do great, local stuff at home, why not do great local stuff that’s run by local people...

 Necktie Reuse » New Startups: Narwhal Company is the inspirational idea of an everyday person that was looking to move away from the 9-5 lifestyle...

 Dog’s Collar Comes with Tweets » "Puppy Tweets" dog’s collar allows dog owners to follow their dog on twitter. This plastic tag (introduced by Mattel), comes equipped with...

 Friend of Trends » Trend Friend is an online (and smartphone accessible) gift idea database that allows users to quickly find the trendiest gifts based on...

Need more brand new promising business ideas and innovations around the world you wish you'd thought of? Visit CoolBusinessIdeas.com now!

Ever wanted to be the CEO of your very own Starbucks or Amazon.com? Fire your boss and be your own boss? Now you can, with BIZNESS! - the free biweekly business newsletter about new business ideas, opportunities and innovations from around the world. More than just new business trends, BIZNESS! helps the aspiring entrepreneur (you!) with small business advice, business tips, and entrepreneur resources and opportunities.

   Subscribe for free now!    

---