Becoming a Master Franchisee

When a franchisor has perfected their franchise formula and crafted a popular and successful brand at home, they might consider expanding into overseas markets. But to do this, they need the support of a master franchisee.

A master franchise agreement provides exclusive rights to sub-franchise in a designated territory. As a master franchisee, you’d be expected to develop a franchise infrastructure to enable the business to grow overseas efficiently.

As many global franchise brands continue to expand their operations by bringing their businesses to the UK, there’s no need to pack your bags. If you have the characteristics necessary to be a successful master franchisee, you might be able to become one without jumping on a plane.

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What roles do you need to play as a Master Franchisee?

When you become a master franchisee, there will be a number of roles that you will be expected to play. Let’s have a look at them one by one:

1. Investor

As well as being very driven and committed, it’s important that a master franchisee has money.

Running a global franchise has many rewards but bringing an overseas brand to the UK and making it succeed is not cheap. You’ll need to fund the operations of the franchise before sub-franchisees can make their own investments – and the costs add up quickly. Developing the required infrastructure for a master franchise is no cheap enterprise.

2. Hiring manager

Once you’ve signed off on your master franchise agreement, one of the first things that you will need to do is hire franchisees that can effectively own and operate franchise units.

Just as with any franchise, you’ll be looking to recruit franchisees that have the right combination of attributes. These include:

• Dedication
• Determination
• Commitment to making their business a success

The success of the franchise as a whole will depend on you selecting quality franchisees who are prepared to adhere to the franchise model to ensure brand consistency. Previous experience in the industry and business ownership is not necessary for a franchisee to be successful, but having passion and enthusiasm is a must.

3. Market expert

As master franchisee (especially at a national level), to an extent you will have to copy what the franchisor does in their domestic market. But you also need to show your own creative vision. After all, the reason the franchisor has chosen the master franchise route to expand their business is to take advantage of the local market knowledge that a master franchisee can offer.

This means you’ll need to have plenty of knowledge of the ins and outs of your market. This should include expertise in the following areas:

• Relevant legislation
• Demographics
• Recruitment processes
• Seasonal trends

In all, you'll need to consider everything that is specific to the UK that the franchisor may not have experienced in their country.

Just like the franchisor is an expert on their business, you will need to be an expert in yours. That way, as partners, you can work together to make the franchise an international success.

4. Business developer

A master franchisor may have enjoyed running profitable franchises overseas but making that same franchise a success in another country is something very different. That’s where you come in. A global franchise rarely works in a new market with no adjustments.

This is why master franchisees can be more skilled at developing a franchise concept in their own country. You have a much more in-depth understanding of the social, technological and economic differences between countries.

Not only that, but you’ll be close enough to the operation to see how the franchise is progressing.

For this reason, you’ll benefit from the flexibility that comes with being a master franchisee. Unlike most conventional franchisees, you will have permission to modify the brand to suit the local market. In a world as diverse as ours, that can be the difference between success and failure.

5. Leader

As you’ll be responsible for managing a strong team of franchisees, you’ll require proven leadership skills. The franchisor is effectively putting their brand and reputation in your hands, so they’ll expect you to provide guidance and direction consistent with their expectations.

6. Mentor

The reason that many entrepreneurs choose to invest in a franchise above starting their own business is the training and coaching that's on offer. They get to be the boss without having to start a business from scratch. This also applies to a master franchise.

You must be able to develop and deliver the initial and ongoing training that’s needed to teach the sub-franchisees how to be successful and run profitable franchises. As well as being a competent trainer, you also need to be approachable and available to provide coaching and to mentor when necessary.

7. Manager

The most important role that you will have to play as a master franchisee is that of manager. Just like a normal franchisee, you will have to manage people and exercise authority – but this time it is on a much larger scale.

Management of any kind entails difficult decisions. That can include letting members of staff go, or shutting down a unprofitable franchise unit as a whole.

But managing a master franchise is not all about making high-pressure decisions. Let’s have a look at what else you would be expected to do:

• Inspire others
• Organise staff
• Uphold standards
• Balance the books
• Convince shareholders

If they’re going to be carried out correctly, all of these roles require the right management traits. Amongst other things, a master franchisee needs to demonstrate diligence, optimism, authority and skills of persuasion.

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Mistakes to avoid as a master franchisee

Master franchise opportunities should only be considered by experienced franchisees that have the right character traits. Though the role has many benefits, it is also fraught with risks that can trip the wrong candidate up.

A common mistake that master franchisees make is choosing the wrong opportunity from the beginning. To make sure you don’t make the same mistake, it’s worth asking these questions:

• Is the brand right for the UK market?
• Does it provide the right management structure for you to thrive?
• Does the business model leave enough room for profit?

When considering master franchise opportunities, you need to be cautious and prepared to wait for the right company to come along. Don’t be afraid to end conversations with a franchisor if they don’t provide you with enough information, apply pressure on you, or aren’t prepared to work collaboratively.

The Importance of Planning

You'll only risk investing in the wrong opportunity if you haven't performed adequate research. Even if the franchisor has completed market research to determine if the product or service will work in a different country, you still need to verify their findings with your due diligence.

Let’s have a look at some of the things that you can do to make sure that you are making a sound investment:

1) Develop a business plan

When researching your investment, it pays to develop your own business plan. In that document, you can explore the different costs involved in the venture and find out how much room there is for a healthy profit. Try to exhaust these as much as possible; fine details like the cost of petrol can make the difference between a franchise that succeeds or falters.

But business plans are not all about hard numbers. It’s also an opportunity to sketch out your franchise structure. Then and there, you can work out your working relationship with other franchisees and assign different responsibilities.

2) Consult the professionals.

As well as setting out a business strategy, make sure that you consult franchising professionals that can offer you advice. They are the brains of the business and will be able to forewarn you about any unseen hurdles.

The BFA is one of the franchising’s leading authorities. It strives to uphold standards in the industry by recognising those franchises that employ good business practices. A reliable way to find out if a franchise package is legitimate is to check if it is BFA accredited. If it is, you can trust that you are joining a franchise that looks after its franchisees.

3) Conduct plenty of market research

For your business to be successful, you need to know your competition. Set aside some time before you make your investment to work out the demographics of the market and what their appetites are.

It also pays to evaluate your competitors and work out what they’re not doing. That’s what you need to do if you want to find your niche, fill a gap in the market and bring the customers to you.

Once all of these things have been completed, you are prepared to make your investment. It’s a long process but starting a master franchise is a massive decision. It requires plenty of patience and reflection to make sure that the venture is right for you.