Most recognized brands offer their international franchisee through a master franchise model or a master franchise arrangement. In fact, if you have a business which needs several franchisees over a large territory, and will have a large number of units operational, then creating a master franchisee that would be the interface between the company and the unit franchisee is a very logical strategy to have. The instant advantage of having a master franchise is:

You can concentrate on appointing the master franchise while the master franchisee will appoint the units.

The Master Franchise is the local expert. They have better connectivity and understanding of the culture and the geography and can be extremely helpful in quick scaling up. A Classic example of this is the India McDonalds Franchise where the 2 McDonalds Master Franchise, Hard Castle Restaurants for West and South India and Connaught Plaza Restaurants for North and East India. Similarly, Subway India Master Franchise works on a Development Agent Module which is another Master Franchise format that several companies follow.

The Master Franchise can contribute to the training of the unit franchises. While the initial training could happen at the HO of the franchisor, the ongoing training and support can be managed by the master.

The Master Franchise could also play a vital role in customizing the offerings for their customer base. These learning’s could be transferred quickly to the parent company ensuring that the model suits the foreign country faster than it otherwise would have taken.

In some cases, a master franchise has the obligation and right to open a number of independently owned and operated franchise outlets. They can enter into agreement withpeople who are looking to become franchisees and appoint them as unit franchisees. As a master franchisee,they have the authority to provide the rights of doing business to others, who can then open and operate business on behalf of the parent company. These other franchisees are called as sub franchisees.

As an entrepreneur, you have to sign a master franchise agreement to become a master franchisee. You have to pay a master franchisee fee to the franchisor followed by royalties or other share in ongoing business. All sub franchisees pay franchise fee and royalty, which is usually shared between the franchisor and the master franchisee. Depending on terms of revenue sharing as per the master franchise agreement, the total amount of revenue is distributed and shared, amongst the franchisor, the master franchisee and the unit franchisee.

The master franchise generally has several skill sets that they bring to the table. They are generally large groups or companies or individuals who have the experience and the capability to manage and grow the franchise. They generally have sales and management experience, however varying upon what the exact specifications of the franchiser is Several times, the master franchise opens the first pilot outlet, which serves as a demo unit for all other unit franchises to replicate. They also operate as a unit franchise and take the responsibility for the smooth functioning of several other locations where sub franchises are operational. Moreover, the responsibility of obtaining and educating other franchisees could also be given to the master franchisee.

This particular form of franchising offers the opportunity for the franchisee to participate in a business model that has already been proven successful. The master franchisee usually receives continuous support and training from the main franchisor directly and that is passed down to the business in its unit format.

It is possible to hire skilled employees to help you manage your business while you continue to concentrate on other business that the group is focused on,which is another advantage of becoming a master franchisee.These franchisees have the advantage of earning a portion of the initial startup costs and also obtaining continuous royalty payments from the franchisees within the master franchising organization. The entire master franchise is so well structured that once you have a team in place, they go about executing their individual functions as per the operations manual of the master franchise.

The initial costs are usually quite a bit higher than investing in a regular franchise, which is one possible drawback of entering into master franchising agreement. Most international franchisors that have successful franchise in place expect a lot of upfront fees and added commitment in terms of the capital investment from the master franchisee. They want to be sure that the group is putting in enough capital to ensure that they make it a success in the foreign country. There may be a great deal of extra time and resources involved in getting the master franchise organization up and running which is another possible disadvantage which when evaluated by the prospective master franchisee may seem mountainous to begin with.

Before opting for a master franchise business relationship, research the possibility thoroughly before investing. Read through the fine lines of agreement papers with the help of franchise consultants, financial and legal professionals. To see how they operate, make sure to pay a visit to several franchise locations in which they operate after visiting the head office and meeting the Key People.To understand how the entire concept works, it is also wise to speak with other master franchisees in other countries and evaluate how long they have taken to establish the brand in their country and the support that they have achieved from the franchisor.

On the whole, master franchising can be a once in a life time business opportunity asit creates quite a decent income opportunity along with a status of representing or owning an international brand for your country. However, in order to get the highest chance for success, it is important to find the best match for your skills and interests and co-relate that with what is acceptable for your country and what will succeed now and not after a decade. Some franchise ideas could be ahead of time and hence will need that much more resources and perseverance to succeed. So do your research, spot the correct master franchise opportunity and get your hands on a successful international business.