If you’re planning to expand your brand abroad, your success is highly dependent on the performance of your master franchisee.
When franchisors look for opportunities to grow, many of them realize that astronomical growth exists beyond their borders. It doesn’t matter if their borders are the United States of America, Germany, Japan, or Kuwait, to name just several. Sooner or later, indigenous franchisors decide to expand into another country via master franchising, a concept that allows investors to acquire, build and expand a foreign franchise concept in their home country.
How well does it work? No one but franchisors and master franchisees know for certain. No one agency or association monitors master franchise development, so global data are not available. But successful master franchise ventures exist around the globe. Just look for the Golden Arches when traveling abroad, or the pizza delivery vehicles, or branded hotels, or automotive services, or the world’s largest Cheesecake Factory (the master franchisee, Mohammed Alshaya, built it first in Kuwait then later in Dubai).
But don’t be fooled. Master franchising is complex and often does not succeed in spite of the money invested. In fact, it’s fair to say that success or failure in master franchising isn’t about the money. It’s about the people! Unless franchisors know how to select the right investors, and resist selling to the candidate with the most money, master franchise ventures will fail.
So what’s it take to become a successful master franchisee? Money, of course, but there are more important qualities to consider. Here’s a list of 20 qualities identified by successful master franchise developers.
1. A successful business background. A former master franchisee of AlphaGraphics, and more recently the founder of Edwards Global Services, William Edwards says it’s critical to look at a candidate’s ability to build a successful business. Unit franchising requires most candidates to open and operate one location, but master franchising is different. A master franchisee is required to develop many units in a country or a region usually via sub-franchising. Pay attention to the master franchise candidate’s ability to sell unit franchises.
2. Passion for the business and the brand. Passion is at the top of the qualities list for
Tipton Shonkwiler, international director of United Franchise Group, with franchises in more than 80 countries. “Ultimately, the master franchisee is your brand ambassador in a country,” explains Shonkwiler. He says a master must be a leader and that passion precedes leadership skills.
3. Capital to grow your business. Make certain the candidate has enough money to launch and sustain the business over a minimal period of three to five years.
4. Honesty. The franchise relationship is built on trust so it’s important to examine the
master franchise candidate’s history in business, says Robert Jones, who for 22 years helped American franchise brands expand globally as a member of the U.S. Foreign Service. Today, Jones is international managing director of Edwards Global Services. He tells franchisors to spend time investigating a candidate’s veracity.
5. Experienced management to put into the business. Because they open and operate a franchise, and then recruit, train and support franchisees who open and operate numerous units, the master franchisee can’t do it all alone. Those who have a team to fall back on are more likely to succeed.
6. Access to suitable real estate. It’s only important if the franchise requires real estate, but a key to success for many master franchisees is their ability to tie down appropriate real estate, says Edwards.
7. Strong work ethic. “You need to know that the master franchisee will show
up even in the most challenging times,” says Tony Foley, who sells internationally for United Franchise Group.
8. Flexible and open to new ideas. Foley says a master franchisee needs to follow the
franchisor’s system before deciding it won’t work. “If the master franchisee isn’t willing to try new ideas, even though they’re foreign, the chances for success are less,” he explains.
9. Commitment and dedication. Money is a sign of commitment, but it’s not
enough in a master franchise relationship. “You want to know that in spite of the obstacles the master franchisee is dedicated to building the business,” says Shonkwiler.
10. Goal setting abilities. Master franchisees will have a vision but can they achieve it?
A good master franchisee must demonstrate the ability to set and achieve goals.
11. Ability to help others set and achieve goals. Master franchisees must be able to influence their franchisees to accomplish goals.
12. Family oriented. Foley says he likes to see a master franchise candidate among family. How they get along with siblings, for example, can be a good indicator of their potential as a master franchisee.
13. Sense of humor. laugh at himself and still get the job done?” asks Foley. “It’s important that people have the ability to laugh and move on.”
14. Marketing oriented. Jones points out the importance of the master franchisee
understanding the local marketplace. A franchisor from another country probably won’t be adept at marketing in the master franchisee’s territory.
15. Great people and networking skills. Shonkwiler prefers a master franchisee who is socially outgoing and has a talent for networking. He says, “Our most successful masters get out into their communities to attract business.”
16. Character qualities. Along with honesty and trust, a master franchisee must be loyal,
understanding, truthful and intelligent.
17. Values money. Having money to invest in the franchise is one thing, but understanding how to handle and value money is another.
18. Legacy builder. “Why do they want to be a master franchisee?” asks Foley. “If they’re not interested in building something big, and leaving a legacy, being a master may not be the best role for them.”
19. Good reputation in their country. How do bankers, lawyers, and other business people regard the master franchise candidate?
20. Team player. Master franchisees always rely on a team of professionals to succeed. Confirm that the candidate has performed well in team settings previously.
ABOUT THE AUTHOR
Dr. John P. Hayes is the Titus Chair for Franchise Leadership at Palm Beach Atlantic University in West Palm Beach, FL. Students at PBA earn a business degree with a concentration in franchising.
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