Why become a master franchise owner
When you consider that the master franchise fee for a whole country for a service-based franchise is often less than the cost of setting up a single unit outlet for some food service or premises-based retail franchises, one can see why more people are thinking "Why should I just become a single unit franchisee when I could be a Master franchisee?"
Skills required
Of course, the skills required of a Master franchisee are very different, but for someone who is of the mindset of a typical franchisee, i.e. not too entrepreneurial and looking to be part of a proven system with established support structures, master franchising can offer far greater potential than simply running a single franchised outlet.
Becoming the local operation of an overseas franchisor is not just an opportunity for individuals looking to start their own business. Many existing businesses look for opportunities from around the world, particularly those companies who are experienced in a particular field, say food service retailing, who have the operational expertise but perhaps lack the creativity, time or money to develop their own new products or services from scratch.
Potential conversion opportunities
New products for an existing client base or distribution network, or even an opportunity to convert existing stores to a new brand, can quickly transform a business, which has perhaps grown tired.
Potential conversion works to the advantage of both master franchisor and developer as they can more quickly achieve brand awareness than they would opening a store at a time. Having an established network available for conversion is also a good bargaining point for the prospective developer in reducing the up-front fee on the grounds that income flow, from ongoing fees, will grow more quickly.
Trends in the market
An interesting trend around the world is for existing franchisors (or indeed master franchise owners) to be looking for another franchise system to operate alongside their original network.
This often happens if they are nearing capacity, when they basically have two choices - either become an international franchisor themselves, and take their own brand overseas, or start another franchise at home, hopefully gaining some efficiencies from existing support team structures.
Looking at it from the overseas Franchisor's point of view, someone who already has experience of running a franchised network may be a very attractive prospect as a Master Franchisee as they will already have many of the required skills, and maybe even the staff. This means the operation should grow faster than taking on someone with no franchising experience.
Author: Brian Duckett, The Franchising Centre
