Buying a Master Franchise can offer an exciting business opportunity for those seeking a larger investment than simply acquiring a unit franchise, equally with the anticipation of greater profits.
An interesting question and one which has the answer – ‘it depends’!
A franchise comprises a licence to allow another party to operate the franchisor’s business. So the first element that must exist before a franchise is launched is a business, not an idea, but a real business with an operating track record that shows the business makes money. Franchising an idea or a loss making activity that you think has the potential to be a business is a recipe for failure.
The business must have the ability to adapt and thrive as a sustainable long term activity. A flash in the pan ‘fad’ is not a good basis for a franchise. The franchise business will inevitable change and develop over time, but the fundamental rationale for the business has to be more than a five minute wonder.
You must be able to protect the business to ensure that others cannot copy and operate without a licence from you. It must have some unique properties, a product or a service and a brand that belong to you or which you can control and which ‘tie’ the franchisees to work within your network.
It must also be an activity that is capable of being carried out by others once you have trained them and provided you continue to support and develop your franchisees. If the business revolves exclusively around your involvement, then it may be difficult to franchise.
As the Franchisor you must accept that a successful network cannot exist simply by you selling franchises and expecting the franchisees to prosper with little or no ongoing support from you. Franchising is a long term commitment from all parties. The Franchisor has to invest heavily upfront and the rewards will not be immediate – you have to be prepared for the long haul.
So, anything can be franchised provided it is:
- a financially viable business with sufficient margin for both the franchisor and the franchisee
- a business that is sustainable and has some unique properties that can be protected
- a business that can be replicated by the franchisees, with the franchisor’s training support and guidance
- a business owned by a franchisor committed wholeheartedly to the business and the franchise network.