Three Reasons Why Master Franchising Might Not Be Right For You

Master franchising is one of many different growth paths within the franchising industry, creating room for expansion and increased revenue. But though master franchising can be exciting, rewarding and profitable, it definitely isn’t for everyone. In this article, you’ll find out what master franchising is, why some people love it, and why some people don’t.

Master franchising is far from your only option as a franchisee, and whether or not it appeals to you will depend on a number of factors, such as the type of day-to-day work you enjoy, and the amount of time you’re willing to invest. This article should help you decide, one way or the other, how you feel about becoming a master franchisee.

What is master franchising?

A master franchisee is a franchisee with permission to run a franchise in a specified region or country on behalf of a franchisor. Master franchisees make larger franchise investments, and in return for those investments, receive more responsibility and power within the company, and a share of royalties and fees from franchisees operating in their region/country. This practice is known as master franchising.

Master franchising has many advantages for both franchisor and franchisee, and is often a method employed successfully by franchisors when they’re looking to start a franchise in a foreign country. A master franchisee who comes from that country can be hired to run things over there, using their unique cultural knowledge to the business’s advantage, and bridging the language gap (if one exists).

If you're thinking of becoming a master franchisee, at the very least you should carefully research the previous experience of the other successful masters to make sure you have the necessary skills and capital to make this opportunity a good one for you.
— Jeff Elgin, Entrepreneur

Three signs that running a master franchise isn’t for you

Now you know why so many people choose to become master franchisees when given the opportunity. But some people don’t, and there are plenty of compelling reasons not to want to enter the world of master franchising. Here are three signs that running a master franchise probably isn’t for you...

1. You don’t want to make too much of a time commitment to franchising

It should come as no shock that running your own business is a time consuming process, and this is amplified by taking on a managerial role. If you’re driven, passionate and invested, the time it takes to become (and succeed as) a master franchisee is worth it. But if you’re not looking to throw all of your time into something, you probably don’t want to be a master franchisee.

If, for example, you’re currently a part-time franchisee, you’ll be taking a huge step up in terms of responsibility and time commitment in order to become a master franchisee, and you’ll need to think it through very carefully. The dream might appeal to you, but is the reality something you’re truly looking for, and ready to fully invest yourself in?

2. You dislike teaching, leading and managing, and prefer a more hands-on role

This is a big one, and will likely be make or break in terms of whether master franchising is the right path for you. A huge part of life as a master franchisee is dedicated to teaching and training franchisees and employees in your region/country. If you want this kind of role, you’ll need to be a teacher type, with listening and speaking skills in equal measure. You’ll need to be a leader, able to: 

• Set an example 

• Build strong working relationships

• Demonstrate passion, dedication, knowledge and care

• Display patience

• Exude confidence 

• Execute a clear vision

You’ll also need to enjoy the more managerial parts of running a business, rather than the hands-on day-to-day that you might experience as a smaller scale franchisee. If you love doing the work and interacting directly with customers, you’d be better off either staying where you are (if you’re already a franchisee) or (if you’re preparing to take the plunge) investing with a smaller-scale franchising operation in which you have no or few employees.

3. You don’t have the money on hand to make a large initial investment 

For master franchisees, initial investment costs are expectedly high, though they vary from franchise to franchise. Before you commit to master franchising as your next avenue of growth, you’ll need to figure out whether you actually have enough money to invest in, start up and run a master franchise. If you over-invest, you set yourself up for failure down the line. Don’t go broke trying to meet financial requirements that you can’t really afford. 

Master franchising isn’t the only available growth avenue

At this point, you probably have a good idea of whether master franchising is right for you or not. If you’re leaning towards “not”, remember that master franchising isn’t the only available avenue for growth within the industry. Another potential option is becoming a multi-unit franchisee. A multi-unit franchisee runs several different franchise units/locations within a defined geographical area. Benefits of this kind of franchising include:

• Reduced costs per franchise unit

• Staff flexibility (team members can be shuffled between units as needed)

• Simplified marketing tasks (can be replicated across all units)

• The chance to negotiate better prices on supplies and equipment in return for regular business from multiple sources

[Multi-unit franchisees] know how to make money and can scale a business. These individuals have professional management experience and are very comfortable in this role. They can manage people and have strong organization, finance and relationship development skills.
— Rick Bisio, Forbes 

Running your own business equals tailoring an experience that suits your lifestyle

If this article has shown you that, actually, you’d be perfectly suited to the demands of master franchising, find out all you need to know about becoming a master franchisee. Alternatively, if you’ve realised it might not be for you, consider looking further into multi-unit franchising with these eight tips.