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What is a Master Franchise?

You are most likely already familiar with what a franchise business is. However, did you know that there are master franchises as well as regular franchises? When a company or organization operates a master franchise, the rights to operate that particular franchise for a complete geographical region, such as a City, County, or even a State, is under its control.

Master franchisers employ people in the area they control to sell opportunities to operate or even buy one of their franchise locations. When this occurs, the person who made the franchise location sale must share the fees and any income that is made from royalties (the right to use brand names, for instance) with the master franchise.

Two very familiar examples of master franchises are Midas® Mufflers and Burger King® restaurants. There are, of course, other businesses that are considered master franchises.

A master franchise is different from a regular franchise. A master franchise can literally prevent a regular franchise from operating in a specific area.

Let’s say “ABC Enterprises”, holds the master franchise rights in the fictional city of Tigerland. “CDE Enterprises” is a regular franchise that offers the same or very similar services as the master franchise, and wants to open a branch in Tigerland. Because “ABC Enterprises” has master franchise rights in Tigerland, however, “CDE Enterprises” can’t open a franchise branch. They must either sell their regular franchise to “ABC Enterprises” or find somewhere else to operate.

Master franchisers can also wear two hats. They can be both franchisers—those who own and sell franchises—and franchisees—those who buy and/or operate franchises, because they can sub-franchise.

When this occurs, master franchisees do not experience some of the limitations that regular franchisers might. For instance, a regular franchisee is most likely to make his products or services directly available to the person or persons who will ultimately be using them. A master franchisee, however, has income being generated by sub-franchises.

The licenses that allow master franchisers to operate as such usually require that the person or organization wishing to become master franchisers make a substantial investment. Some are willing to do so, however, because of the advantages that can and do exist as a result of being a master franchiser.

Becoming a master franchiser or even a master franchiser/master franchisee does have advantages if you have the funds to invest in such an enterprise.

About the author

Rob Bennett

Rob had served in the corporate-world for 18 years filling various technical capacities, from structural design to project engineer. His experience lends to FranFinders strategic planning, systems design and optimization.

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