Deciding on if “Franchising” is right for you requires some investigation on your part before you dive into a franchise agreement. Below are the four levels of franchising.
It is best to consider all aspects of each level, before deciding upon a level in which you will be investing in.
Single-unit Franchises: A franchisee has the right to operate one franchise unit. Most franchisees enter the world of franchising by owning or investing in one unit. It is a great way to get in and understand the system before taking on more units.
Multi-unit Franchises: The franchisee acquires more than one unit of the franchise, usually at reduced franchise fees. The risk is lower because the franchisee can take advantage of the economies-of-scale theory; by spreading costs across multi-units, the locations may be more successful. A good sign of the health of the franchise is if many of the franchisees are multi-unit owners. Investing in franchising here can be very lucrative
Area Development Franchising: This license usually grants the franchisee the right to open a certain number of franchises in a given area. There is usually a production schedule where the franchisee must open a certain number of franchises during a certain period. The franchisee has an exclusive area where no other franchisees can be allowed to open a franchise.
Master Franchises: A Master Franchisee, sometimes called a Regional Developer, has the rights to a larger area than that of an Area Developer. The Master Franchisee, in addition to opening franchises at a much reduced franchise fee and royalty, can also sell unit franchises, multi-unit franchises and area development franchises and make an amazing return on the sale and his/her decision made on investing in franchising. The "Master" usually receives a part of the royalty and franchise fee paid by each franchisee. There may be additional income available from distribution of products through the franchisees in the area and possibly even some real estate interest. The "Master" becomes somewhat of a sub-franchisor for the area, without having experienced all the trial and error the original franchisor did. The "Master" franchisee will usually want to open and operate at least one unit (pilot location), for income and use as a training center.
Master franchises are rare; most franchisors do not offer them. However, when they are available they usually sell quickly. The income available from a Master franchise agreement is extremely lucrative. The initial investment is low compared to the type of value you can build in the Master franchise area.
The flexibility is also the greatest at this level.
The choice is Yours! Always consider investing wisely!
Polar Bear Joe (aka- Joseph G. Toal) is an International Franchise Consultant who also helps people with advanced internet marketing technics, tools and solutions for all business owners by visiting http://www.scopeoutleads.com/leads.php you can learn about his strategy on how he helps people place their business on auto-pilot regarding their marketing efforts. You are invited to meet Polar Bear Joe by visiting him at http://www.franchisehunters.ca – Thank you for reading his articles.