What Is a Master Franchise?

A master franchise allows individuals or corporations to buy the rights to sub-franchise within a specific U.S. territory or another country. Even though the initial franchise fees are higher, a master franchise license can lead to greater growth than a traditional franchise. In turn, the master franchisee keeps a good portion of the initial fees and royalties that the individual franchisees pay over time. Franchise companies generally communicate

with their franchisees directly or through a master franchisee. A master franchise allows the franchise company to expand in a specific territory, often a major market or in one or more states.

A master franchise essentially runs two separate businesses — one operating a single franchise and the other expanding the franchise company. Each requires different skills and, generally, the companies are set up separately. For both, having sales and management experience is a definite plus for a prospective master franchisee.

The types of master franchise opportunities available are as varied as the people who run them. From discount golf retailers to skincare centers, master franchises are everywhere. But before you close a deal for purchasing a master franchise, it's important to have a clear understanding of exactly what's involved. You must remember, for instance, that no matter how attractive an opportunity appears, the business viability of the entire system must be solid.

Here are some points to consider before making your final decision: