Positioned below the overall franchisor (essentially corporate headquarters) in the franchising pyramid, master franchisees find, train and support regular franchisees for a specific, large geographic territory.

This territory could range from a large city to a state, province, or entire country.

There is pressure on master franchisees – or sub-franchisors – to enlist franchisees fast enough to power a brisk expansion into a new territory, but to do so without jeopardizing the uniformity of high brand standards.

When a franchise network expands beyond its country of birth by appointing master franchisees, they tend to favor candidates with a strong knowledge of the local sector, language, culture, and legal and economic environment.

Even when the country is as close as Canada, many US brands expand to their northern neighbor via master franchising with these same motivations in mind.

Master franchise market research

Master franchisees shoulder much of the financial risk of this expansion, supplying a fee and operating capital. However, they can generate a considerable return on their investment through fees and recurring royalties paid by dozens or hundreds of potential sub-franchisees.

The overall franchisor will be rigorous in their screening process for prospective master franchisees, who in turn should be diligent in checking the bona fides of the brand they’re considering investing in.

Before you commit to signing a master franchise agreement, you should quiz the company on how they will help you fulfil your responsibilities.

Also conduct an analysis of its growth and financial statistics and the broader industry growth rate and ask how they intend to adapt their business model to the latest industry trends. They’ve succeeded so far, but will they continue to do so?

Finally, before signing that bottom line, be sure to pore over the franchise disclosure agreement, which generally runs for 10-20 years and outlines your rights and obligations.