Things to keep in mind while buying a master franchise
If you are someone who has already made up your mind about buying a master franchise, then there are definitely some points that should be kept in mind. Since master franchising needs a huge initial investment, it is very important for you to prepare well because otherwise mistakes can be fatal for your business.
So here are a few things that you should keep in mind while buying a master franchise
• An appropriate area As a master franchise it is very important to select an appropriately sized business area. It is very important that the business area as well its size should be decided only after assessing the franchisee’s resources. It is very important not to purchase rights for a large area just for greater profits because the demand can vary greatly over a large area and hence it might not be possible for one master franchisee to service such a huge area.
• Market Research It is very important to investigate various factors such as, which franchise to buy? Have you also considered the strength of demand and its sustainability, or the competition? The decision to buy a particular franchise should only taken after these questions are properly answered.
• Splitting of Money The ratio of splitting of the money received from the franchisees should be decided in advance. Make sure that there is no ambiguity in this regard. This has been a major source of conflict in the past
• A strong business model One should have a strong business model in place through which one plans to enter the market. ‘Strategy’ is the keyword here. A master franchisee should have foresight and always plan for the future.
• Franchise contract One should usually consult an expert franchise attorney to prepare an in-depth and fair franchise contract in which all the terms and conditions are stated clearly. This document is legally binding on both the concerned parties and will be referred to in case of a dispute.
• Aspiring Franchisee Although not a necessity, it would be good if you can prepare a list of prospective franchisees this will help your business get off to a good start.