Looking To Buy A Business – Then think Master Franchise as an alternative!
Are you are Interested in buying a business, with a proven business formula with systems and management structure in place? Then look at purchasing a Master Franchise as a viable alternative.
Starting a business from scratch; proving a business model, generating a brand, all takes time, capital and effort. Success is not assured and many such businesses fail.
One alternative is to acquire an existing business. If you want to generate more than wages then you need to expend capital of around $500,000. The business may have been in existence for many years, it may have staff in place, and it may make a profit. The question is how much growth can you gain from that business without making substantial additional investment?
Many people buying a business are often buying themselves a job as well as the flexibility of being their own boss. The ability to attract and employ people to grow the business is restricted by the cash flows generated. As such business tend to grow slowly and a great deal of capital is expended in finding and employing the right people for the job.
As an alternative if you have sufficient capital to buy a business, then why not purchase a Master Franchise from a successful franchise owning company. In entering into a Master Franchise agreement you have the right to develop that business within the State, region or Country.
What or who is a master franchise? Why do they exist?
The owner of business may wish to expand that business rapidly. As business owners they may wish to expand across the USA and Internationally.
In order to achieve rapid expansion the business owner will need access to capital, employ a myriad of business managers both with the USA and Internationally. For most businesses this is a major challenge.
One answer to this problem is to Franchise the business. Provided the business is scalable then the Franchise global expansion model may offer the solution.
The franchisor (owner) retains the intellectual property and the brand/trade marks for the business. The owner then looks to appoint business partners into the business by offering a Master Franchise.
The purchaser of the Master Franchise will most likely be entrepreneurial in character, but elects to acquire a Master Franchise as they realise that commencing a business on their own from the ground up takes significant capital and resources.
By acquiring a Master Franchise from the Franchisor, they obtain the right to promote and sell units of a franchise in a specific area. This can be within a given State, part of a State or can be country based to allow up international expansion.
Sounds like an Area developer. What is the difference?
The biggest difference is that unlike an Area Developer, a master franchise is not bound to open and maintain units. He or she can open one unit for training or as a model unit; but his or her prime focus is to spread the name of the franchisor in the chosen market.
A master franchisor also gets to keep a part of the franchise fee and royalty fee that people who buy a franchise pay to the franchisor. Also, a master franchise is supposed to train the people like a main franchisor in many cases.
Sounds good, can I get one?
Since the function of a master franchise is like a franchisor, only experienced people are considered as master franchisees. Then again, not all franchise opportunities offer this program. Many times, international franchises use it to spread faster in a new country. Also, you need sufficient capital to purchase the master franchise initially as well as capital to develop the business.
How big will be the area?
It can be anything between a state and a country! Among different franchise business for sale offers circulated by a franchise concept, a master franchise has the largest area. If the master franchisee opens the required number of units within a given time-frame, the area is more or less exclusive.
How is the return of investment?
A master franchise has more than one channel of generating earnings.
Besides getting a part of the franchise fee and the royalty fee, the master franchise can derive earning from its own sales by opening its own unit within the franchise area.
The Master Franchise owner buys a scalable business and is able to leverage their return without incurring significant employee costs. The maximum size of the business is dictated by the total estimated Franchisees that can be appointed within the Master Franchisees area.
It’s the Master Franchisees role to recruit new franchisees and ensure that they provide ongoing support. A great deal of this support is given by the Franchisor, who often centralizes training and development.