Within the world of franchising, there exists a little-known opportunity that can create millionaires, known as a Master Franchise or Regional Franchise Developer Franchise. It is simply the owning of the exclusive rights to sell or open a given number of franchises in a given protected territory.
In other words, a Master Franchisee or more accurately a Regional Franchise Developer, develops a franchise system within a protected territory. This territory can be a metropolitan area, an entire state, several states or even a country. The Master Franchisee assists the franchise company in developing the territory in exchange for a share in the up front Franchise Fees as well as in the weekly Royalty Fee revenues that are generated from the franchised operations within that territory. The Master Franchisee pays the franchisor a fee for these rights and must provide certain services to existing franchisees within the defined territory. In building that territory, the Master Franchisee usually does not enter into agreements with the franchisees but rather facilitates the coming together of the franchisor and the franchisee. Once the franchisee has entered into the franchise agreement, the Master Franchisee may aid the franchisee in site selection, build-out, equipment acquisition, training coordination and in opening, operating and insuring quality control.
For these ongoing services the franchisor pays the Master Franchisee a split in the royalties and franchise fees earned within the territory. This can represent up to one-half or more of the revenue stream earned by the franchisor within the territory.
With owning a Master Franchise you enjoy all the benefits of being a franchisor without the burden of having to develop a concept from scratch. They have a proven track record, brand name, and a successful operating system. You basically become their partner in a territory. The franchisor provides you with valuable support, latest innovations and business experience.
A Master Franchise has numerous benefits
over a standard franchise, such as:
- Royalties: You receive royalty income or annuity type income for the life of the franchises that are open in your exclusive territory. Usually 4% to 6% of each franchisee’s gross sales every month.
- Sale of Products: Some Master Franchises earn income from the distribution of specific products and supplies within their territory.
- Obtain Prime Locations: As a Master Franchisee landlords may offer you choice locations.
- Financial leverage: Leverage your income stream to develop additional units and increase the value of your territory.
- Turnkey Unit Development: Develop turnkey units and sell them for a considerable profit and build additional royalty income.
- Financing Franchisees: Finance franchisees or receive compensation from third party lenders.
- Building Equity: Once you sell a few franchises or open your own stores, you significantly increase the value of your Master Franchise business. Also as other units open in other territories and the Franchisor grows, your territory may become very valuable.
- Build a Nest Egg For Your Heirs: Pass on a substantial monthly income to your heirs.
- Acquire Under Performing Units: You will have first hand knowledge of under performing units which you can acquire and turn around for a considerable profit.
- Prestige: The prestige of owning a Master Franchise and controlling an entire area can give you tremendous satisfaction and financial leverage.
- Very Few Customers: Your clients are your franchisees. You help support them.
- Very Few Employees: Typically you will operate a Master Franchise by yourself and then expand to have an administrative assistant, a trainer or other support staff or sales person. As you business grows larger you may need to add more staff. It is not unusual for Master Franchisees after having developed their area to semi-retire and spend minimal time with their business while enjoying a large substantial income.
- Minimal Office Space Required: You can usually start with a home office before expanding to an outside office.
- Low overhead: Start small and expand as you go.