Master/Regional Franchises For Sale

Master and regional franchises offer entrepreneurs a much larger slice of the pie. It can be a good option for an existing franchisee who wants to scale up their current portfolio, or an enticing opportunity for entrepreneurs who are wanting to create a much bigger business empire.

In this guide, we’ll outline the distinguishing features of a master or regional franchise, how they differ from single franchise agreements, and where to find master franchises available in the UK.

What is a master franchise?

A master franchise gives an entrepreneur the rights to operate a brand across a specific region (usually a country) – so essentially you’ve got a lot more ground to cover than with a single franchise agreement.

To help with this, you’ll recruit sub-franchisees - which are the entrepreneurs who want to open a single location in a much more specific area. You’ll also open up some of your own locations.

As a result, you’ll be profiting from opening locations across the UK, but you’ll have to foot a much bigger investment, as well as manage the operations of the brand nationwide and supporting your sub-franchisees as they launch their businesses.

Often, master franchises will be used by global brands aiming to expand rapidly across the world. This can be useful because you’ll be able to see what the business already looks like in different markets.

What is a regional franchise agreement?

A regional franchise agreement in the UK will be similar to a master franchise agreement. However, instead of overseeing brand expansion across the whole country, it will be in a smaller area (usually counties).

For example, you could sign the rights for a franchise covering the whole of Sussex and Kent, before being responsible for recruiting fellow franchisees in these counties. What is a master franchise agreement?

The master franchise agreement, also referred to as a master licence, is the legal document between the franchisor and the master franchisee.

It will outline all your agreed rights including what your territory is, how many franchisees you must recruit, yours and your franchisors obligations, and how much you will have to pay for the franchise.

“This agreement is used predominantly in international franchising, so that a franchisor wishing to expand overseas and not wanting to do so itself appoints a master franchisee in the foreign countries,” says John Pratt, senior partner at Hamilton Pratt.

“The master franchisee is trained up to enable it to provide the franchisor’s obligations in the franchise agreement, in return for which the franchisor receives a percentage of the initial and continuing fees.

“Sometimes master licences are used in the franchisor’s own country, so that a country is divided up into various master territories.

“However, in the UK this is unusual and generally does not work because, unlike the US and Australia, where such regional masters are common, the UK is really too small for this type of arrangement to work.”

How much is a master franchise?

The cost of a master franchise differs greatly depending on your chosen industry, territory, and brand. However, its likely a master franchise agreement in a key market with a brand like McDonalds is going to cost a lot more than a lesser-known brand with smaller growth ambitions.

The master franchisee will provide investment for the overall agreement, systems, and their locations, and sub-franchisees will provide investment for their locations.

“The master franchisee will be required to provide the financial resources to establish and exploit the system in the target country or region,” confirms Shelley Nadler, legal director at Bird & Bird. “Whatever financial resources are needed to establish the system and operate it in that country will have to be found by the master franchisee.

“The sub-franchisees will provide the financial resources for the operation of the outlets that they operate. The master franchisee is responsible for the recruitment of staff for the pilot operations, as well as for the establishment of the infrastructure of the master franchisee’s own business organisation.

“The fee income generated by sub-franchisees is divided between franchisor and master franchisee.”

How to become a master franchise

Master franchises are a big undertaking and as a result you’ll find franchise brands searching for months and sometimes years to find the right candidate. As a result, it can also take time to find a brand you’re willing and comfortable to invest in.

1. Research master franchises

Initially, you’ll want to spend some time researching what a master franchise entails. You may want to talk to other franchisees who have taken the jump and understand the impact it has had on their work and lifestyle.

It may be useful to attend industry events such as the International Franchise Show to meet the brands currently looking. Here, you’ll be able to ascertain what franchise’s typically look for in a candidate and ensure you can tick all the boxes. (You can also find the brands currently looking for master franchisees in the What Franchise directory).

2. Make sure you’re the right candidate to be a master franchisee

Usually, franchises will be looking for an experienced franchisee, who has capital and contacts. You’ll also find that management companies will also take on master franchise agreements and operate them as a business.

3. Talk to franchises and other master franchisees

Once you pinpoint the brands you’re interested in, contact the franchise. Sometimes a franchise won’t be advertising a master franchise agreement but could be open to it – so make sure you’re clear on what you want when contacting.

4. Decide upon your chosen brand and submit and application

You’ll have to submit an application to the company to take on the master franchise. This will be very thorough, including your business plan for the territory and an outline of your financial resources.

5. Enter legal negotiations

If you’re selected to take on the master franchise agreement, you’ll then enter into legal negotiations with the franchise until both parties are settled on obligations and goals.

6. Launch your first location, and look to scale

Once you’ve signed your master franchise agreement, you can begin implementing your business plan and building your brand across the UK.

How to sell a master franchise

If you’re a franchisor, master franchising can be a good way to expand your brand into worldwide territories.

However, a lot of the business’ success will depend on finding the right candidate which is why it can take a long time to find the right franchisee. (If you’re going through this process and generating few leads, don’t be disheartened – it’s a big investment ask, and this is normal).

Before you begin looking for a candidate, decide upon who you’re looking for and what your goal ultimately is. A lot of franchisors choose to find a master franchise in the UK, with a wider plan to expand across Europe in the future.

After this, it’s about getting the word out. This can be through industry exhibitions like the International Franchise Show, organisations such as the British Franchise Association, as well as directory portals such as What Franchise and Global Franchise.

What does a master franchise do?

A master franchisee typically has more responsibilities than a single territory franchisee. This is because you’re overseeing brand growth across a much larger area. As a result, the master franchisee role tends to sit between the franchisor and the single territory franchisee.

Your responsibilities will usually include:

- Setting up and launching your own location in the UK.

- Recruiting franchisees who want to open single territories.

- Providing training and ongoing support to new franchisees.

- Scaling the brand across the territory.

- Maintaining operations and brand standards as the franchise grows.

- Liaising with the franchisor. (It’s important you find a business that has a good support system. Some franchises have failed because international support has been weak.)

Master franchise advantages and disadvantages

Master franchises can be a big advantage to ambitious franchisees as well as international businesses who are keen to grow their brand. Benefits for franchisees commonly include:

- An opportunity to earn much higher revenue than a single territory would.

- A good amount of control over the business’ growth strategy.

- The opportunity to delegate the day-to-day operations of the business.

- An influential position in carving out the brand’s footprint in the UK.

However, it’s also important to recognise that there are disadvantages to a master franchise and this could render the opportunity the wrong fit for you. Disadvantages for franchisees include:

- There are significant management responsibilities, which could be stressful.

- Rapid franchise expansion means there’s a lot of ongoing legal admin.

- Reliance on single territory franchisees means risk is increased.

- While master franchisees ultimately have more freedoms than single territory owners, they must still adhere to franchisor guidelines.

What is the master franchise business model? And are there similar types of business agreements?

Master franchise business models essentially give master franchisees the rights to develop a brand across a territory. In this scenario they’ll often act as a type of franchisor, recruiting their own franchisees.

However, there are similar franchise business models that allow for these large-scale franchise developments. (It’s wise to also consider these and whether they may suit you better).

The models include:

- Area development agreements

- Area representative agreements

- Unit franchise agreements

- Joint ventures

Investing in a master franchise vs franchise

Whether you choose a master franchise, or a single territory franchise will depend on your goals and the kind of work life you’re trying to create.

Master franchises are likely to offer a fast-paced work life with a lot of responsibility. The investment will be a lot higher, but so will the revenue. It’s an ideal option for someone who has ambitious goals of creating a business empire.

A single territory franchise may be a better option for someone who is looking to run their own business and wants to focus on creating a solid revenue stream in one area. The investment will be smaller, and it doesn’t necessarily mean that you can’t scale your business in the future - as you’ll likely be able to buy more locations if you wish.

Finding master franchise opportunities

There will be fewer master franchise opportunities in the UK in comparison to single territory franchise opportunities. This is because it’s a bigger undertaking for both the franchisee and the franchisor.

However, you’ll be able to find brands that are looking for master franchisees in the What Franchise directory as well as at industry events.