What is a Master Franchisee?
A Master Franchisee, sometimes called a Regional Developer, has the rights to a large geographic area. The Master Franchisee, in addition to opening franchises at a much reduced franchise fee and royalty, can also sell unit franchises, multi-unit franchises and area development franchises and make a nice return on the sale. The Master Franchisee usually receives a part of the royalty and franchise fee paid by each franchisee. There may be additional income available from distribution of products through the franchisees in the area and possibly even some real estate interest. The Master Franchisee becomes somewhat of a sub-franchisor for the area, without having experienced all the trial and error the original franchisor did. The Master Franchisee will usually want to open and operate at least one unit (pilot location), for income and use as a training center. Master Franchises are rare; most franchisors do not offer them. However, when they are available they usually sell quickly. The income available from a Master Franchise is extremely lucrative. The initial investment is low compared to the type of value you can build in the Master Franchise area. The flexibility is also the greatest at this level.
Territory: Usually is a large metropolitan area, an entire state or even several states or country. It is an exclusive area and will remain exclusive as long as the Master Franchisee meets the development schedule of franchises in the territory.
Level of Participation: The master franchisee will usually set up and operate at least one unit and use a manger to manage it while working on selling other "sub-franchises" and assisting them in operating properly. Very rarely is a Master Franchisee "hands on" in a unit franchise. They tend to spend more of their time operating like a business consultant or coach to their franchisees to help them become successful.
Typical Liquid Capital Required: $75,000 to $250,000 is needed to acquire the territory and for initial liquid capital to start the area. Financing will be secured for the start-up of the unit franchise.