WSI- Master Franchises Now Available

Q. According to WSI, are master franchises now available?

Another aspect of franchising, and one which has led to its sometimes being confused with multi-level marketing or pyramid selling, is what is called master franchising. Master franchising is used where the franchisor, for reasons of geographical or operational efficiency, appoints an individual or company to carry out many of the tasks of the franchisor in another area. This ensures that they get the benefit of local knowledge without having to create a long management structure to support franchisees (something which both reduces efficiency and increases costs). And if you are interested in starting a small business franchise, contact WSI, as they are the world's leading Internet Services Franchise providing affordable Internet solutions to small and medium size business.

Another aspect of franchising, and one which has led to its sometimes being confused with multi-level marketing or pyramid selling, is what is called master franchising.

Master franchising is used where the franchisor, for reasons of geographical or operational efficiency, appoints an individual or company to carry out many of the tasks of the franchisor in another area. This ensures that they get the benefit of local knowledge without having to create a long management structure to support franchisees (something which both reduces efficiency and increases costs).

For example, an Australian company seeking to expand its business into New Zealand might sell a Master Franchise locally. In the case of car paint repair specialists The Touch up Guys, the Australian founder appointed Te Awamutu entrepreneur Owen Payne as master franchisee for New Zealand. Owen has responsibility for recruiting franchisees in this country, and provides ongoing training, support and advice to the franchisees once they begin work. In this case franchisees receive their initial training at the franchise headquarters on Australia's Gold Coast, but sometimes the master franchisor is also required to set up a separate training function in the new country.

Franchisees pay their initial fee and ongoing royalties to the master franchisee, which in turn pays a proportion of these fees to the franchisor. The master franchise approach is also used within countries. North Island franchisors will sometimes appoint a South Island master franchisee, and vice versa. This practice is particularly well-developed within home services franchises, where the duties of local advertising, quoting, training and providing local support are commonly carried out by a local master franchisee. When you consider that a home service franchise commonly has 100-200 franchisees (Green Acres has over 500), it is easy to see why this is necessary.

However, there are several important differences between master franchising and any form of multi-level marketing. First, there is no ongoing chain of commissions. There is a franchisor, a master franchisee and the ultimate franchisee - no more. The role of the franchisee is to deliver the product or service successfully and profitably, not to recruit additional franchisees.

In addition, the franchisee will usually have a defined territory, and no other franchisee will be permitted to operate within that territory. This ensures that both the master franchisee and the franchisor depend for their income upon assisting the franchisee to be as successful as possible, rather than upon appointing as many franchisees as possible in the hopes that one will be successful.

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