Franchising

Master Franchising Provides Profitable Opportunity
Licenses are harder to find, but the advantages are worth it.

When exploring the option to buy a franchise, investors with substantial assets to invest may have the option to buy a Master Franchise.

What is a Master Franchise, and how does it differ from regular franchise ownership? A franchisee typically buys a single franchise unit, such as a restaurant or retail store. A Master franchise buys the rights to develop multiple units within a defined territory, which could be a city, a county or even a country.

The Master franchise license entitles the owner to collect fees and royalties from the franchises within the territory. This in turn provides a lucrative income stream. The Master franchisor is in fact a sub-franchisor of the parent corporation, and takes over many of the responsibilities for recruiting, training and supporting franchisees.

There are several ways to profit as a Master franchisor, who basically buys the rights to:

* Sell franchise units to franchisees, and keep a major portion of the initial franchise fee.

* Collect ongoing royalties from franchisees within the territory.

* Distribute and profit from products used in the franchise units.

* Profit from real estate negotiations and transactions associated with franchise properties.

However, the Master franchise does not have to start a business from scratch, developing systems and processes by trial and error. Like a single-unit franchisee, the Master Franchisor invests in a proven business with an established brand and customers.

Most Master franchisors do own and operate a single unit, and often use this location as a training ground for new franchisees within their territory. This unit may be the initial entry point into franchising, and with success of that unit, can come the rare opportunity to buy a Master franchise. Just as with single franchise ownership, a Master franchisor has to present a convincing business case to qualify for the license and to get financing.

Finding an opportunity to invest in a Master franchise can be difficult, since far fewer of these opportunities exist than for single unit franchises. And a Master franchise calls for a substantial investment usually requiring at least $75,000 up to $250,000 in liquid assets.

In return for that investment, Master franchisors enjoy several advantages in addition to profitable revenue streams:

* Few or no employees to manage.

* Low overhead to run the business with little office space and equipment required.

* No retail customers - territory franchisees are the customers who pay for the support provided by the Master franchisor.

* Operational support from the larger franchise system.

* High probability of success since 92 percent of franchise businesses do succeed.

* Personal independence since, once established, many Master territories can be operated part-time.

A Master franchise license should not be confused with an Area Developer agreement, which stipulates that a franchisee will sell and open fixed number of units within a given time frame in a designated territory. Area Development licenses are more commonly used to introduce a franchise in a new country.

To find out more about buying and operating a franchise, visit http://www.franchisedirect.com

The "up side" to Master franchising is nearly unlimited, and most Master franchisors are able to lead a "semi-retired" lifestyle after only a few years. The financial investment is large, and the initial efforts in recruitment and training can be rigorous, but once franchisees are established, the Master franchisor stands to gain a substantial, ongoing passive income for many years.