Many people want to be a franchisor and not a franchisee. Some of them own businesses they would like to franchise, but they note that someone else has already franchise that type of business and are quite successful. Often, they do not wish to compete against such a successful company or there are several successful corporations franchising in the same industry and they feel the competition will just be too high.
Still, they might realize their dreams by becoming a master franchise; which is basically a franchisor under the same brand name that operates within a region or state. Buying up the state rights to franchise a given franchise brand name might be a very wise way to go. It is definitely something to look at and worth looking into.
Indeed, I recommend that someone who wants to become a master franchise have franchising experience or bring on board a CFE Certified Franchise Executive from the International Franchise Association who has the least a decade or more experience in franchising at least a similar type of business format.
You must realize if you wish to be a master franchise that you’re going to need quite a bit of funding. Generally a franchisor needs about $ 1 million to turn a prototype small business that has been up and running for ten years into a franchising company. Of course, if you buy a master franchise and wish to franchise only one state and you’re going to use the current franchisor’s system to do so, and thus, you can probably get by on a lot less.
Still, you are going to need a good chunk of change for working capital for the first five years and you should never buy a master franchise opportunity from a startup franchisor unless they have all the bugs worked out, and have a solid team behind them with excellent capital. Please consider all this.