What's a Master Franchise and Why Own One?

For a select few, the opportunity to control an entire regional area for franchise brand can lead to great satisfaction not to mention a substantial 6-figure residual income.

As a Master Franchisee you will be associated with the brand name as the main developer of an area. Think of it like being the regional manager. The business of a Master Franchisee is to build the territory – develop new franchisees and support them in being successful in their new businesses. Master Franchisees are the elite owners in any franchise system and the support, often direct from the company President, is substantial.

Significant Rewards

This level of ownership isn’t for everyone. It takes extensive management and/or executive sales experience. Previous business ownership is helpful but not essential. Good people and presentation skills, persistence and the ability to follow a proven system are necessary along with the ability to self-finance the startup which can run from $50,000 to $250,000 or more.

But the rewards are substantial. Master Franchisees typically earn from 50% to as much as 95% of franchise fees for each new owner they bring into their territory. With many franchise fees running $25,000 or more, that can really add up quickly!

Ongoing royalties – the ultimate income source – payable to the Master Franchisee can amount to 2% to 21% of franchisees’ gross revenues. So a regional system generating average unit revenues of $1-mil per location at 3% returns $30,000 per unit to the Master. 15 units will pay a $500,000 residual income annually!

Sales of products or additional services to franchisees such as cleaning supplies in a commercial cleaning business, paper goods in a restaurant business or hair care products in a salon business can generate additional income to the Master Franchisee. No question, being a successful Master Franchisee can be a very rewarding business opportunity!

First Unit is Yours

A Master Franchisee business typically includes opening an initial franchise unit to demonstrate the concept to future buyers. Often, that unit’s franchise fee will be included in the initial Master Franchise purchase. The Master can choose to open and operate the first unit himself or form a partnership with someone else who will open the unit and eventually buy him out.

Each new business you add to your territory builds equity in your Master Franchise business. A typical unit franchise might show a value of 1.8 to 2.8 times earnings. But a Master Franchise which has very little fixed cost grows much faster and can average 4 to 9 times earnings. So even though the initial buy-in can be substantial, so are the rewards.

Low-Overhead Business

A Master Franchise is typically a home-based business with one or two employees. Salespeople to recruit new franchisees, typically paid on commission, can be added to drive growth. The owner’s role, in addition to bringing new franchisees into the system, will include negotiating leases, supporting new franchisees through startup, providing marketing coordination, coaching and support for the franchisee group.

Not all franchise businesses offer a Master Franchise opportunity and among those that do, it may be available in some areas but not others. Because of the unique requirements they are not widely advertised. Your franchise consultant will know which ones have open opportunities and can help you explore this exciting franchise investment option.