Pros and Cons of a Master franchise
It is often said that master franchising is the most assured way to success. With a success rate of almost 90%, it sounds great but is it really so good? If it is, then why doesn’t everyone get a master franchise? These are a few questions that need to be answered before you decide whether to be a master franchisee or a normal franchisee, so let’s have a look at the various pros and cons of owning a master franchise
• Great profit potential Owning a master franchise offers a great profit potential because you get royalties from franchisees spread over a huge area. Also your business costs are low when compared to those of a franchisee.
• Huge financial incentive It is said that master franchising offers the best route to fast money because under a typical franchising system, a master franchisee gets to keep a substantial amount of the initial fee that your franchisee pays to the franchisor. Usually the initial fees come in fat pay cheques and hence more franchisees would definitely mean an ever-fattening bank balance.
• Authority Apart from money, a master franchisee also gets some authority over the franchisees in a specified area. This helps you to participate greatly in the growth of business
• Improved access to the franchisors services A master franchisee gets improved access to the services offered by the franchisor such as training and hiring staff, financial, legal and business advice.
• Huge initial investment To own a master franchise one needs to invest a lot of money especially in the beginning. The money to be paid to the franchisor in order to acquire rights over a particular area is usually a very large sum.
• Very Selective Franchisors Franchisors are very selective and particular while selling a master franchise because the failure of a master franchise in a particular area can greatly affect their overall brand image.
• High stakes Due to a huge initial investment, there is a lot to lose in case your business fails
• Added Responsibility As a master franchisee, you not only have to manage your own business but also manage and guide the business of your franchisees. This puts a lot of responsibility on the shoulders of a master franchisee.