HOW FORTUNES ARE MADE
Owning a Master Franchise is the ultimate franchise opportunity. It provides numerous advantages over a standard franchise and yields multiple streams of income.
ROYALTY/FRANCHISE FEE ADVANTAGE
Assume you purchased a territory (Master Franchise) from a franchise company at a pre-determined amount.
Your agreement with the franchisor is that you would receive 50% of each franchise fee and 50% of the royalty income from every individual unit that you sell in your territory. Let’s assume that the franchise fee is $30,000 per unit and the royalty each unit pays is 6% of their gross sales. That means for each unit opened in your territory you would receive $15,000 (50% of the $30,000 franchise fee).
Let’s also assume that each unit opened in your territory has an average yearly gross sales volume of $1,000,000. Each unit would pay a royalty of 6% of their gross sales, which is $60,000 per year. You as the Master Franchisee would receive 50% of this amount which is $30,000 per unit per year.
If 10 to 100 units opened in your territory, your royalty income would be $300,000 to $3,000,000 per year. You would have also received an additional franchise fee income of $150,000 to $1,500,000.
(This example is for explanation purposes only and not a guarantee)
Besides receiving franchise fees and royalties, there are numerous other ways to generate income as a Master Franchisee.
OTHER SOURCES OF INCOME:
Building Equity. Once a Master Franchisee sells a few franchises or opens their own stores, they significantly increase the value of their Master Franchise business. Also as other units open in other territories and the Franchisor grows, their territory may become very valuable.
Turnkey Unit Development. Develop turnkey units and sell them for a considerable profit to build additional units and royalty income.
Financial leverage. Leverage the royalty stream to develop additional units and increase the royalty income and value of the Master Franchise territory.
Acquire Under Performing Units. Master Franchisees will have first hand knowledge of under performing units which they can acquire and turn around for a considerable profit.
Rental or Sale of Real Estate. Obtain a commission or profit on the rental or sale of properties to franchisees.
Financing Franchisees. Finance franchisees or receive compensation from third party lenders.
Sale of Products. Distribution of specific products and supplies.
Sale of Additional Services. Master Franchisees may be able to offer other resources to the franchise network such as accounting, bookkeeping, insurance, training, and/or consulting in return for additional fees.
Improved Quality of Life. Master Franchisees own and enjoy a quality of life business. Here are some key characteristics about the typical Master Franchise.
Prestige. The prestige of owning a Master Franchise and controlling an entire area can provide tremendous satisfaction and financial leverage.
Very Few Employees. Typically a Master Franchisee will operate a Master Franchise by themselves and then expand to have an administrative assistant, a trainer or other support staff or sales person. As their business grows larger they 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.
More Freedom. Unlike an individual unit franchise, a Master Franchise allows the investor much more freedom. Their primary function is as a business consultant or coach to their franchisees. They usually don’t have to deal with the burden of running a unit or multiple units, but they still receive a portion of their franchisee's gross sales.
Build a Nest Egg For Their Heirs. Pass on a substantial monthly income to their heirs.
Very Few Customers. A Master Franchisee's clients are only their own franchisees that they have sold individual units to. They help support them.
Low overhead. Start small and expand as they go.
Minimal Office Space Required. They can usually start with a home office before expanding to an outside office.
Obtain Prime Locations. As a Master Franchisee landlords may offer them choice locations.
No Experience Needed. In most Master Franchise opportunities they will receive specific industry training and ongoing support.
A Master Franchise has many benefits and advantages over a standard franchise, and it is truely a way to create, keep and grow WEALTH.
Brands are not born fully grown. Almost every franchisor begins with some local brand recognition (it may only be a neighborhood) and has to grow that brand to achieve regional or national status. This is the great thing about the Master Franchise Opportunity. You can take a successful company (franchise) from one part of the country and duplicate it in the geography that you want to control. And best of all is that it includes a complete system in place to help you grow. They have eliminated all the mistakes that start ups always make, and offer a clear path to business success.
Each franchise system is different, each franchisor does not prescribe identical levels of controls, and each does not strive for the same level of consistency. But most franchisors do have standards that define the minimum levels of service and operations required from the franchisee. Every location - whether it's owned by a franchisor or a franchisee - no matter where it is in the world, should look and feel the same; in restaurants, the food should taste the same. Ever wonder why every Courtyard by Marriott always has a coffeepot in the room and a bar of soap and bottle of shampoo in the bathroom? It's one of the brand requirements set by the franchisor. In other words, with some minor variations and even if the menu is a bit different in different areas of the country or the world, your experience at every location should be the same. Every well-managed franchise system strives to achieve a high degree of consistency so that the buying public knows what they will get just by looking at the brand.