Master Franchising – Benefits and Responsibilities
Imagine coming up with the idea of a new franchise concept that explodes in Cyprus with dozens of new units opening up. Imagine having control of this concept and receiving royalties and franchise fees on a constant basis. Imagine having access to the best business experts to help guide you in your new venture to build your organization. This opportunity is not rare. This highly successful opportunity is called master franchising.
With master franchising you get all the benefits mentioned above without the expense of having to develop the concept from scratch. You get control of the successful franchise system in a specific geographical area, a proven track record that works, the brand name and even a “partner” to give you valuable support, latest innovations and expertise when you need it.
Master franchising gives you a degree of power, as you will be in charge of the other franchises that will be established in a specified country or region.
As a Master franchisee you will not only be given the company’s structure and access to its training and support system, you will have the authority to appoint, train and receive a proportion of fees from ‘regular’ franchisees.
The responsibility for a large area offers a great earning potential, as a model is already in place for marketing the business and distributing the product. If there is enough interest from franchisees, company outlets can quickly spread and provide the franchise with a better chance of making a strong impression in the market sector.
However, to purchase a master franchise requires a significant investment, making it essential to ensure that everything is in place before assuming the role of master franchisee.
Substantial market research needs to be carried out across the whole country or region, as the product or service needs to appeal to consumers in a number of diversified places.
It is important that the contract with the franchiser is straightforward and uncomplicated so that the master franchisee knows exactly what is covered and expected of him.
Contract issues may include how much power is given, when the renewal process starts and how to go about it, and the exact territory area controlled, particularly for regional master franchisees.
It is advisable to consult a lawyer with some experience in licensing agreements to check the contract.
In addition, master franchisees will in effect be running two separate businesses and so they must be prepared to handle the pressures of ensuring that franchised outlets are up-and-running successfully across a country or region.
This position is certainly very demanding, but with an excellent management structure in place and good support from the international franchiser, a significant return on investment can be achieved.
A certain amount of patience is understandably required, and master franchisees must concentrate on the long-term, as there is a fair chance that a few local franchisees will fail to make an impact and have to close.
