Wednesday, March 21, 2012
Master Franchising, The Best Kept Secret
One of the BEST kept SECRETS in franchising is MASTER FRANCHISING, which is sometimes known as Regional Developers. Everyone understands that franchising is about duplication and consistency. Everyone is looking for the next McDonalds. But did you ever ask yourself if YOU own the next McDonalds, WHY would you franchise? Kensington Affiliates & Associates is happy to answer this for you.
Company’s franchise for two basic reasons, an excellent source of capital and the ability to help insure consistency by owners having a vested interest in the success of their operation. As John Paul Getty once said: “I would rather have 1% of 100 good men, then 100% of just myself.”
Master Franchising allows you to strategically partner with the Franchisor and share in the growth of the concept by managing and growing a region. The KEY word is “Managing.” The Master Franchisee owns the rights from the Franchisor to develop and manage a defined territory, which can be a large metropolitan area, an entire state, an entire region or even an entire country. As the owner of your territory you grow the concept by selling franchises within your region. The reward is sharing with the franchise company the royalty revenue and franchise fees that are generated from the operations within your defined region. LIKE the Franchisor you do not have to be involved with the daily operations of each franchise, but instead Support, Assist and Manage your franchisees.
If you are fortunate enough to own the Master Franchise rights to an exciting concept that is growing you will be able to generate consistent residual revenue from sharing in the royalties that the franchisees pay. The best kept secret of Master Franchising is that you are able to generate all these benefits without the upfront expense that the franchise company had to spend to develop the concept. Master Franchising is the ultimate EMPIRE BUILDING Business.
Master Franchising or Regional Developers usually have numerous revenue streams. Each company is unique, but usually the following are some basic parameters:
Company owned site: The Master Franchise or Regional Developer usually operates at least one unit within their defined region. There are tremendous economies of scale for the Master Franchisee is able to operate their corporate office from their operating unit. In addition, their franchise fees are usually half of what a franchisee pays, which results in more profits to the bottom line.
Franchise Fees: Usually the Master Franchise or Regional Developer share equally the up front franchise fees. Typical franchise fees range from $20,000 to $50,000, and therefore the portion of the fee that a Master Franchisee earns would be $10,000 to $25,000.
Monthly Royalties: This is the GOLD. This is why you purchase the rights to develop a territory. As the Master Franchise or Regional Developer you share in the on going royalties with the franchise company. Typically you will receive between 2.5% to 5% of your franchisee’s revenue every month. This is a tremendous wealth creation vehicle for you and your heirs.
Additional Sources of Revenue: Depending upon the concept and your personal situation, some franchise companies allow for you to share in the profits from the sale of products and services.
Benefits of Master Franchising
Own an Entire Territory for many times less than the price of building one Fast Food Restaurant
Own an Exclusive Territory which will produce Residual Income that YOU are able to control
Excellent Life Style Business
Tremendous Freedom to create an Empire Building Business
Work ON your business INSTEAD of just in the business
Ability to develop sites within your territory with the added bonus of being able to then sell them as an on going business, AND still keep your share of the monthly royalties.
Acquire under performing units and turn them around with the option of either keeping them within your portfolio or selling them and receive your share of the monthly royalties, WITHOUT worrying about the daily operations of the unit.
Minimum Customers, for the franchisees are your customers. The primary job is to help support and guide them. Remember you also have the support and help of the franchise company. Basically a Master Franchisee is a coach to their franchisees.
Minimal Employees, the primary role is to develop the territory and provide assistance to the franchisees. Until market penetration is developed, very few employees are required; in fact many Master Franchises have at the most an administrative assistant and a trainer. Once the territory is developed a number of Master Franchisees or Area Developers are able to semi-retire and enjoy their monthly residual income which is created by the successful development of their franchise territory.
Equity is built in the business as your territory is developed. As new franchisees join the system the value of the Master Franchise business should be greatly affected in a positive manner. This is what most buyers of companies are looking for; GROWTH and RESIDUAL Income.
Industry specific experience is not usually required, it is more important to have excellent communication and people skills to be a successful Master Franchisee. Remember you are NOT running each unit, you are instead overseeing all of your franchisees.
If you believe that you have the necessary skill set to help grow a company, and desire to build a large empire with consistent residual income then Master Franchising might be just right for you. At Kensington Franchise Sales, we can help navigate the many choices that you have with our professional Master Franchise Experts.