What is a master franchise?

On Behalf of | Nov 9, 2021 | Franchise Law

Texas business owners might have heard of franchising, but master franchising is a little different. Master franchising describes the practice of opening up many franchise locations in a specific territory so that you become a franchisor for that specific region or area.

There are several reasons why someone would consider starting a master franchise. For one thing, people who go into master franchising can receive a large percentage of the franchise fee and royalties from all the locations.

What’s the relationship like between the master franchisor and the franchisor?

The master franchisor will work with the franchisor, which is most often a national brand, to benefit from marketing, newest updates and technologies as well as supplies. The franchisor also benefits a lot from the master franchisor, who will manage multiple locations and reduce the risk of the locations failing.

The franchisee for each individual location will also turn to the master franchisor to help them communicate with the main company. While the franchisee will handle the day-to-day operations of their location, the master franchisor will handle communication between that location and the franchisor.

What does it take to start a master franchise?

Master franchising is considered an advanced business practice. This is because it takes a lot of time and experience to introduce the brand into a new area or region in addition to a lot of capital.

Starting a master franchise can be expensive, with returns often not coming in until months or years after the brand is established. Often, master franchising is a huge payoff for developers and area representatives before the master franchise owner.

Becoming a master franchisor also means that you’re fronting a lot of the responsibility of staffing, building, and establishing these restaurants. You’ll hire a franchisee to run that specific location, but you’ll still be financially responsible for the initial up-start of that location and all others in the region.

Who can start a master franchise?

As long as you have the experience needed, you can look into becoming a master franchisor. However, with the amount of money it takes to get even one franchise off the ground, a lot of time and consideration should be done before starting a master franchise.