Area Representative and Master Franchising
An Area Representative or Master Franchise is a special type of franchise agreement that gives you the exclusive right to sell or open a given number of franchises in a large geographical area. It is common for Area Representatives or Master Franchisees to encompass large areas or areas containing millions of people. In these regions, you control where all franchise locations will be and how many you will build. The investment in this type of franchise may be large, but the rewards can far exceed those of any other franchise opportunity. This low overhead business, requiring few to no employees, can be built into a business worth millions of dollars. This system is one of the best-kept secrets in business ownership today. It allows the business owner to develop a large business within the relatively short period.
What is an Area Representative?
The Area Representative franchisee develops somewhat of a “sub-franchisor system” for that designated area, without having to experience the trial and error process that the original franchisor did. The Area Representative will generally open and operate at least one unit for income/cash flow and to potentially use as a training center and example for future “sub-franchisee” owners.
Area Representative Franchises offerings are rare; most franchisors do not offer them. However, when they are available, they typically sell quickly. The income potential of an Area Representative can be very significant. Flexibility is also great at this level.
Area Representative franchisees usually
Level of involvement
The Area Representative usually sets up and operates at least one unit with a manager so they can work on selling the remaining “sub-franchises”. It is rare to find an Area Representative who is “hands-on” in a unit franchise. Most tend to spend more of their time operating as a business consultant or coach to their franchisees to help them become successful.
Liquid capital requirement
Typically $100K-$500K is needed to acquire the territory and for initial liquid capital to start the area. Additional capital will be needed to open the pilot location for which the cost is normally comparable to that of a single franchise location. However, many franchises offer discounts on the franchise fees for the pilot location.
What is Master Franchising?
Master Franchises are very similar in design to Area Representative Franchises. Master Franchising, however, is normally reserved for a very large geographic area such as an entire country. Many U.S. Franchises use Master Franchising as a means of international expansion. Otherwise, the two models look very similar.
What are the benefits of an Area Representative and Master Franchising?
Skills of a Successful Area Representative or Master Franchisee