As we know, now a days franchise business is very much popular in the business world. By the help of this structure of business, a business man can expand their business easily.
In this structure, any of the business unit can appoint their franchise in any region. Now, here, the businessman who appoints the franchise is called franchiser and the businessman who accepts the franchise is called franchisee. In this structure, both the franchisee and franchiser are benefited.
Why franchisees should be appointed ?
Franchisers appoint the franchisees so that they can expand their business easily. In different regions. And in this type of business structure, franchisees and franchisers both are benefited.
Benefits to franchisors:
Expansion of business :
By the help of this structure of business, franchisors can appoint their franchisees in different areas of the country or out of country also. So that they can establish such a unit in which goods and services are provided same as franchisor. So that the same unit can be expanded. In different regions.
Sharing of responsibilities :
By appointing the franchisee, franchisor doesn’t need to carry total responsibilities of franchise units. The responsibilities are going to be shared between franchisor and franchisees. Just like to improve the selling in local market, to appoint the staff, to handle them and to solve the local problems regarding to business are the responsibilities of franchisees. When franchisor gives his name and reputation for all of these on the base of which franchisee can expand the business in market easily. More over major expanses can be shared.
Financial benefits :
Franchisor can get his charges as the franchisee fees. So it means he doesn’t need to do more physical work but he must has to allow franchisee to use his name and goodwill which he has created in market.
Benefits to franchisees :
As we’ve discussed above, about the benefits gained by the franchisors by appointing the franchisees, in this structure of business, franchisees also are getting benefits. Which are as under.
Use of a reputed name :
Franchisee can use the name and fame of franchisor which franchisor has created after the struggle of long period. And whatever the terms and conditions are confirmed between franchisor and franchisee, according to that. So franchisee doesn’t need to creat his own new status in market by struggling. And he can directly get a very good business.
Sharing of expenses :
A franchisor also becomes helpful in marketing of the products. At the view of expenses. So that a franchisee doesn’t need to carry complete responsibilities as he’s the single owner.
Less efforts to establish a new business :
Due to franchise business, a franchisee doesn’t need to do more efforts to establish a new business because he is already getting an image and reputation of a well established business.
So now a days franchise business structure became very much popular in the modern market. But now a days the consent of master franchise also is going to be spread in the business world. So let’s know what’s the master franchise
Definition of master franchise :
The master franchise grants another person as sub franchiser, the rights which in most cases, will be exclusive, to grant franchisees to sub franchisees within a certain country or state. Or to open a franchise outlets itself.
The sub franchisor pays the franchisor financial compansation for this right.
- This compansation is often taken in the form of initial fees.
- And/or royalties constituting a percentage of the income the sub franchisor receives from the sub franchise outlets.
- The form of financial compansation and the relative importance of the component parts of this compansation will vary from country to country and franchisee to franchisee.
Master franchise agreements may also be used for domestic franchising and not only for international franchising.
As we’ve discussed above , we can have idea of the benefits of franchise business. Now we’re going to discuss about the concept of master franchise. First of all let’s have the idea of master franchise by the help of a chart. So according to definition of master franchise, we can draw the following chart.
From the above chart we can have clear idea about the concept of master franchise and why it’s necessary.
Let’s know something more about it.
We’re discussing especially the following points about master franchise.
- Percentage in franchise fees and royalty
- Established business model
- Confined zone
- Be your own boss
- Skilled employees can be recruited
- Minimum people to supervise
From the above discussion of concept of franchise, we can have idea that why franchise structure is helpful to us to expand the business. Now master franchise is an another similar concept which becomes more helpful to franchiser and master franchisee both of.
This concept means to appoint a master franchisee for a particular territory. And this master franchisee is authorised to appoint another franchisees under him. And he has to manage the business from these appointed franchisees. Company/the main franchiser has to be in contact with master franchisee only. So this is the main benefit to franchiser and master franchisee is benefited that in that particular region, there’s none to compete him for the same product.
Benefits to master franchisee :
There’re so many benefits to take master franchisee which are as under.
- in franchise fees and royalty
Master franchisee will get the percentage in fees and royalty which are collected from the franchisees opened under them.
- Established business model :
By this structure of business, a master franchisee can get well established business model. So that they don’t need to establish a new business unit. It means they don’t need to struggle for it.
- Confined zone :
By the help of master franchisee structure, the master franchisee can have a confined zone to do business. So that they don’t need to be tense. Whatever territory is given to them, they’ve to expand the business in the same territory only. It means they have to work in that region only.
- Be your own boss. :
By having master franchise, you can be your own boss. It means you don’t need to work under any one the region in which you’re appointed as a master franchise, you have to work by your own only and in that particular territory, none is your boss.
- Skilled employees can be recruited.
By having master franchisee, a master franchisee can recruit skilled staff members so that they can provide better services to their clients.
- Minimum people to supervise :
This is the benefit to franchisor. Whenever master franchisees are appointed by franchisor, he(franchisor) doesn’t need to supervise more people. He has to manage only master franchisees. The other franchisees which are appointed by master franchisees will be handled by master franchisees only.
Thus the concept of master franchisee becomes very much easy and beneficial to all. It can be beneficial to franchisee also. Because generally the people who are ready to take franchisee, franchisors don’t know them but master franchisees are from their area only in general cases. So franchisees can trust on master franchisees easily because generally they’re from their areas only. So now a days in modern business world, this concept became very much popular.