Single Unit
A single-unit franchise is one in which the franchisor grants the franchisee the right to operate just one location. The franchisee can use the franchisor’s trade name, service marks, and operating system when conducting business at that location. This is the most common type of franchise.
The relationship is directly between the franchisor and the franchisee. There’s usually no middleman, such as a hired manager. The franchisee will generally—but not always—be the operator of the location.
Multi-unit
A multi-unit franchise is one where a franchisee purchases the right to own and operate more than one unit, typically in the same territory or region. In that case, the owner plays a smaller role in the day-to-day operation and, instead, relies on an experienced management team to supervise store-level activities.
Multi-unit franchise opportunity allows you to expand beyond a single location to encompass a larger area. A multi-unit territory could be 2 or more franchises and can allow you to control a particular market. Your role will be focused largely on managing a team of individuals in these multi-locations. There usually is a franchise fee discount for a multi-unit purchase. There are many advantages to this program. A multi-unit franchise gives you a territory much larger in size versus a single unit and a much larger population in your selected territory. This gives you a better opportunity to really scale your business.
Area Development
Area development is a type of franchise agreement in which investors agree to open a specified number of business units within a given geographical area and timescale. To secure exclusive rights, an investor pays an up-front development fee, plus a franchise fee every time they open a new unit. It’s a significant investment, but there are usually financial incentives available as they open additional branches.
Master Franchise
Within the world of franchising, there exists a little-known opportunity that is the ultimate franchise investment and has the possibility to create a fortune, known as a Master Franchise or Area Representative Franchise. It is simply owning of the rights to develop a franchise system within a territory. This territory can be a metropolitan area, an entire state, several states, or even a country. The Master Franchisee assists the franchise company in developing the territory in exchange for a share in the royalty revenues (percentage of gross revenue from each franchise) and franchise fees that are generated from operations within that territory.
The Master Franchise owner (Master Franchisee) pays the franchisor a fee for these rights and must provide certain services to existing franchisees within the defined territory. In building that territory, the Master Franchisee usually does not enter into agreements with the franchisees (unit franchise buyers) but rather helps facilitate the coming together of the franchisor and the franchisee.
Once franchisees have entered into franchise agreements, the Master Franchisee assists the Franchisor in the management and development of the Master Franchise territory. For this ongoing service, the franchisor pays the Master Franchisee a split in the royalties and franchise fees earned within the territory. This can represent up to one-half or more of the revenue stream earned by the franchisor within the territory from each franchisee.
Example: The Master Franchisee receives 50% of each franchise fee and 50% of the royalty income.
Assuming a franchise fee of $45,000 per unit for each unit opened in the territory the Master Franchisee would receive $22,500 (50% of the $45,000 franchise fee).
If each unit in the territory has an average yearly gross sales volume of $1,000,000 and a royalty of 6% of their gross sales the royalty paid by each franchise unit would be $60,000 per year. The Master Franchisee would receive 50% of this amount which is $30,000 per unit per year.
If 10 to 100 units opened in the territory, the royalty income could be $300,000 to $3,000,000 per year.
In addition, the Master Franchisee could receive a franchise fee income of $225,000 to $2,250,000 depending on how many franchises are sold in the Master Franchise territory.
With a Master Franchise, you could receive franchise fees and royalties from 10-100 franchises or more with each one possibly paying you thousands or even tens of thousands per year and building a substantial long-term income for you and your heirs.
(The example is for explanation purposes only and not a guarantee. Franchise fees and royalties vary depending on the franchise company. Franchise fees typically range from $30,000 – $60,000 and royalties are a percentage of the gross revenue, mostly in the range of 5% to 7%).
By owning a Master Franchise, you enjoy all the benefits of being a franchisor without the burden of having to develop a concept from scratch. The franchisor has a proven track record, brand name, and a successful operating system. You basically become their partner in a territory. The franchisor provides you with training, valuable support, the latest innovations, and business experience. Investments usually start at about $100,000.
Master Franchise LLC Partnerships
Individuals who would like to participate in a Healthcare Master Franchise opportunity but do not have the time to help in the development of a territory can partner with or join an LLC that will have a qualified person who has the responsibility for developing and managing the Master Franchise territory. The minimum investment is usually $50,000.