MASTER FRANCHISING is a concept that few franchise companies actually engage in. The reason for this is that it requires sharing more of the profit on a deal. The trade off is the ability to sell more franchises and grow your concept at an accelerated rate. Many companies have tried and also failed at master franchising. Either the concept did not or would not take off. Failure can also be traced to the overall all strength or ability of the master franchisee that may have been picked for various areas.
Overall, master franchising requires the franchise organization to choose not only an individual that is extremely sales oriented, but one who is well capitalized. After all most master deals require a split of the franchise fee in addition to a split of the ongoing royalties. If the master franchisee has limited cash and relationships on this for a majority of income, they are illegally to be able to weather tough economic times. On the other hand, a well capitalized master may have other interests and may / may not focus on his / her master franchise full time. It is a fine line when picking a specific candidate as a master franchisee.
Some candidates may actually be a better area development candidate rather than a master franchisee. What is the difference? A master franchisee usually pays a higher sum of money for a specific territory. They also get a larger share of the franchise fee and ongoing royalty stream. An area developer typically has a smaller territory and earns less of the overall picture for a lower buy in price. The development schedule is, but not always, usually more of a focus point of the agreement with revocation rights by the franchise company for nonperformance.