SMITH FRANCHISE CONSULTING
Are you considering investing in a MASTER FRANCHISE?
About Smith Franchising & Executive Franchise Match Good day…this is Mike Smith and I’ve been an independent business owner for over 40 years. For the last 20 years I’ve been involved in Franchising as a Unit and Master Franchise owner in Home Improvement, Senior Home Care and Home Inspection and for the last 3 years I’ve been a Franchise Consultant currently representing over 500 successful Franchise brands across North America. Over the years I’ve helped many business professionals find the right Franchise fit and become their own boss. When you work with Smith Franchise Consulting and Executive Franchise Match we put our many years of experience to work for you, exploring your interests and personal background to help determine what kind of franchise is the right fit for you. And the best thing about us is Our Consulting Services are Free
As mentioned we represent many different Franchises offering both Unit and Master Franchises and the following slides will explain what a Master Franchise is:
Overview of a Master Franchise? • With a Unit Franchise the Franchisor grants the right to a Franchisee to develop the brand in a small area i.e. a city or community of approx. 250k population and the Franchisee deals directly with the consumer i.e. B2C. With A Master Franchise the Franchisor grants the right to the Franchisee to develop a much larger territory i.e. a State, a Region or an entire Country. The Master case the right to sell Unit Franchises – called a sub Franchisor - in their territory. • The Franchisor typically awards Master Franchises to candidates who have experience in sales and management. They do not necessarily need to have experience in the Franchisor’s industry as they are given extensive product training. However, strong sales and management skills are necessary to successfully develop a large geographic area. • Most Franchisors offer a Master Franchise business model especially when they want to expand into other countries. So, the basic concept is to award the ‘Brand Rights’ for that country to a qualified candidate who lives in that country and understands the business culture in that country. • Where a typical Unit Franchise has an approx. franchise fee of $40k a Master Franchise fee can start at approx. $250k or more depending on the size of the territory. • Training of the Unit Franchisee could be done either by the Master Franchise or the Franchisor
The Master Franchise Revenue Stream
• Once the Master Franchisee has been trained they are able to sell Unit Franchises in their territory.
• Franchise Fee Split - With an average Unit Franchise Fee of say $40k, the Master Franchisee finds the Unit candidate, takes them through the ‘discovery process’ and if they decide to award the Unit Franchise then they sign a unit franchise agreement directly with the candidate. They then share the $40k franchise fee with the Franchisor. This split could be 50/50 – 75/25 in favour of the Master based on their agreement with the Franchisor.
• Royalty Fee Split – Most Franchise agreements call for the Unit Franchisee to pay a royalty fee to the Master Franchise based on revenue for ongoing support from the Master Franchise, the royalty is typically 5%-9%. The Master is then required to share that royalty fee with the Franchisor. Again the split could be 50/50 – 75/25 in favour of the Master based on their agreement with the Franchisor.
• Marketing Fund – Typically all Unit Franchisees are required to pay into a Marketing Fund which is on avg. 2% of revenue. This fund is paid directly to the Master and is either kept 100% by the Master for them to re-invest into brand marketing in the territory or passed on to the Franchisor to re-invest into brand marketing.
• Master Franchise Resale – Typically a Master Franchise agreement can run on avg. 15 – 20 years and can be renewed or sold at this time. Many people have sold their Master Franchises for an excellent price because of the ongoing residual income from their established Unit Franchisees.
We represent over 500 successful Franchises and many are offering Master Franchises. For more details contact us: ✉ Email: mike@SmithFranchising.com 📱Phone Number: 416.986.4321 Website: www.executivefranchisematch.com