Business success with a Master franchise
As a sales method, franchising has developed into an important economic factor. In the USA alone there are over 800,000 franchise businesses operating at present. In Germany too, where there are currently more than 65,000 franchise operations, franchising is constantly gaining ground.
Become a franchisor
Because of its worldwide reach, many people are aware of franchising as a way of starting up one’s own business. However, few people know what exactly the term “Master franchise” means. In this case, the Master franchise partner buys the licence rights for a large region or an entire country. Business activities focus less on the product or service being sold than on the establishment and development of an interregional or national sales system.
The Master franchise partner thereby takes on some of the Franchisor’s duties: He adapts the franchise offer to meet country-specific conditions, he builds up a regional system head office, he will often launch the first local pilot operation, and he looks after his franchise partners. In exchange, he acquires the right to operate locally as a franchisor, and to award sub-franchises.
Focus on system development
This is a win-win situation for both sides. The Master franchise partner can look forward to attractive potential earnings, as he has a share in the fees of the franchise partners he looks after, while the Franchisor benefits from the continuing development of his system in another country. More and more companies are using Master franchises for their international expansion, a case in point being the real estate franchise system, Porta Mondial, that is currently offering Master licences for Florida and other selected real estate markets.
For whom is this business model suitable? Ulrich Kessler, Managing Director of franchiseportal.de sees a Master licence as an opportunity for interregional or national business success, without the need to develop one’s own concept. To achieve this, the Master licence partner’s network, his knowledge of the given country and its people, and his market knowledge are crucial, in Kessler’s opinion.
“Master franchise partners should have a knowledge of business administration and leadership experience and, ideally, also possess franchising know-how.”
Ulrich Kessler cites entrepreneurs, investors or top managers as examples of suitable Master partners. He says that, depending on the Franchisor’s requirements, they should have a strong market position or substantial financing, as well as extensive leadership and/or sales experience.
Ralf Spielvogel, the International Franchise Manager at Porta Mondial AG, concurs with the franchise expert’s assessment:
“In addition to ongoing revenue, a Master franchise partner first and foremost builds up long-term corporate value.”