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How to Buy a Master Franchise & what you must do before you sign a Master Franchise Agreement.

Guest post by: Amit Nahar

Article Overview: Have you been exploring reputed master franchise opportunities, which you could buy for your country or your region. There may be several unanswered questions that prop up in your mind while you go ahead with this search. The master franchise article below will help you understand several things that are very essential for you to follow, whilst you are on your way, to finding the right master franchise either for your company, group or yourself. Since these acquisitions involve large amounts of capital and other resources, it is very important that you put in the right resources, research and use the right people to help you through this process. I have tried to highlight several areas, which need broad attention, however, each master franchise purchase process is customized to that country, profile, business, industry and several overall

How to Buy a Master Franchise & what you must do before you sign a Master Franchise Agreement.

Almost all companies that want to expand into newer geographies or into global markets, generally have a Master Franchise Model or a Master Franchise Business Plan configured to work within that market with large local players, (High Net worth Groups, Large Business Houses, Senior Professionals within an Industry or for that matter investors who are seeking large investments in tested franchise business models) of that country and get access to the markets and immediate penetration. ‘Master Franchise Wanted', is a common message that you will come across while you are on your Master Franchise How to Buy phase and researching several Master Franchise Lists. There are several master franchises for sale, from across the globe. The more developed American, European and Australian franchise markets have on offer several master franchise opportunities for almost all countries of the world. Master Franchise Dubai, Master Franchise in India, Master Franchise in China is gaining tremendous predominance, as a way of business growth in these countries. In fact you have master franchise specialists in most countries who will guide you with the options that are available for your country as there master franchise broker networks, where these master franchise consultants, socialize and exchange master franchise information. It is very important to make the right first impression, when you are contacting these master franchise companies, and what these franchise consultants would do is, help you make the right first moves.

In a given area, a master franchise has the obligation and right to open a certain number of sub-franchises within a given time frame, generally through a pre-agreed franchise development schedule. The master franchise also has the right to sell unit franchise ownership rights to people or organizations who are looking to become sub-franchisees. As a master franchisee, you could be given rights to recruit/appoint other franchisees, which can then open and operate at more locations. These other franchisees are called the sub franchisees or Unit franchisees. Often there is a master franchise license system that works with the appointment of a unit franchise license with the required master franchise profile approval. Most interested prospects generally go through a Master Franchise Questionnaire which has several questions linked to their back grounds and which then goes deep into a verification stage. The Master Franchise Questions are generally linked to ascertain the ability of the franchisee to execute the Master Franchise Responsibilities, Role and Functions and to ensure that the Brand gets the right momentum within a prescribed time frame.

You have to sign a master franchise agreement and complete all other formalities, laid out by the company, to become a master franchisee. The Master Franchise contract will clearly have you pay a master franchise fee to the parent company (franchisor) for this. A franchise fee and ongoing master franchise royalties have to be paid by the sub franchisees and the master licence to the franchisor, which is usually shared between the franchisor and the master franchise. Depending on the nature of master relationship you have entered into, the percentage of profit is shared. The total master franchise cost is generally a calculation of the initial investment and the ongoing investments as per the master franchise development plan. The franchisor clearly outlines their investments in the country and the support system that they will have including the master franchise training, unit franchise training, master franchise manuals, and other master franchise support systems that they would have in place. Thereafter, they would expect the franchisee to invest in the master franchise system and make headway into the local markets.

If you want to take master franchise of any kind of business model then you should know both the operational and management aspect of that particular kind of business model. Even though you are not from the same industry or you are not proficient in doing the business, the franchisor will train you and have the right support and checks and balances to ensure that you are functioning in line with what the business warrants you to. It then becomes extremely important, in order to make profit out of your master franchise, that you appoint efficient sub-franchisees under your assigned area/region. Apart from controlling the sub-franchisees, it is your responsibility to educate them and support them in all aspects of running the business successfully.

Normally, the master franchisee receives continuous support and training from the parent company rather than being alone in a business venture. It is the duty of the master franchise to pass on the knowledge to further down the line. You are the bridge between the company and the unit franchises. You need continuous support of your sub-franchisees if you want your master franchise to be a successful venture.

The initial costs are usually a bit higher than investing in a regular franchise, which is one of the drawbacks of entering into master franchising. You need to devote a great deal of extra time and resources in setting the master franchise organization up and running. You need some time to bring this kind of business model on to an auto-run mode. Several Business houses or high net worth individuals take up the master franchise and hire skilled employees to manage the master franchise business while they continue to work at another position or operate another business. Once the network is set, as in most cases, the parent company shares a part of the business profit with its master franchises, so you have the advantage of earning continuous unit franchise royalty payments from the sub-franchisees. This is one of the many advantages of owning a master franchise.

Before opting for a master franchise, research the possibility thoroughly before investing. Working with a master franchise specialist in your country is a very vital necessity as they will know exactly the entire process and help you properly with the entire negotiations. They will also connect you with the right financial and legal professionals, who will work parallel with you for all documentation, research and feasibility. Ensure to pay visits to several of the franchise locations to see how they operate. It is better to speak with other master franchisee owners to understand how the entire concept works in their countries. It is also important to study the fine print and understand the entire master franchise terms. Generally, understanding the exit parameters and knowing the master franchise termination consequences, are also critical to making the right choice. You have to be very clear, how much you would lose, if the master franchise failed and how will you bring in the exact resources to manage the same. Certain limiting clauses, post termination have to also be studied very carefully, just to ensure that your future is not impacted by the failure or success of the franchise.

As a whole, a good master franchise could make you popular instantly in your country. We have seen that several business groups have driven on master franchise international brands and have gained very good recognition in their country. Additionally, it creates quite a decent income, as master franchising can be a very solid business opportunity expansion strategy. However, in order to get the highest chance for success, it is important to find the best match for your skills and interests and choose brands and businesses that have a higher chance to succeed. It is not necessary that it some master franchise has been successful in some country, it will be in yours too. So, do your entire master franchise pros and cons with the right amount of research, have adequate resources ready, hire a competent master franchise specialist and get started with your search for a reputed, profitable master franchise business.

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