In last two to three years, bulk of international brands have forayed in India via master franchise route. The risk involved in master franchising is less as compared to Joint Venture, as the franchisor can render help in terms of finances. Let us see wh
Master franchising is a profitable means to franchise and make a great return on investment. The returns reaped are typically higher than investing in stocks or bonds, or starting a brand new business or even purchasing an existing business.
Flexibility & freedom
Master franchising allows an individual to acquire rights from a brand and expand its business concept in a specific area or territory. Thus the Master Franchisee populates his region with new franchise locations by receiving a share of franchise fee and royalty generated with the opening and operating of the individual unit. Sharing his views, Rajat Kapoor, Master Franchisee - Poney and CEO, Ajanta International says, “There are various means by which international brand can foray in India depending upon the type of business. However, Master Franchise route guarantees for more freedom and exercising of ownership. For pan-India expansion a brand can sub franchise it further.”
Master franchise route allows the investor to get associated with a business concept that has already been fully developed. In addition, by partnering with the larger entity, the Master Franchisee receives support and expertise as needed from the franchisor as well as access to new systems and technologies.
The initial up-front costs are a bit high, but once the master franchise license is obtained, prospects of growth are much higher than a traditional franchise. In addition, the Master Franchisee earns income by keeping a share of the up-front fee as well as through ongoing royalties that individual franchisees pay. At times the Master Franchisee can also earn an override on a product that is distributed.
Master franchise route allows the entrepreneur to partner with enthusiastic businessmen from the local Indian market region wise and attain stabilisation and brand growth. Explaining the importance of local market awareness, Anupam Saluja, CEO, Australian Foods India Pvt. Ltd said, “The Indian market is a large diversified market where no foreign brand can be successful without local networking and knowledge. Local monopoly is a key factor when it comes to procuring the right real estate in order to set up an establishment locally within a specific region.”
Additionally, a Master Franchisee can hire others that can help in building the business as an additional source of income, while he/she can procure income from a regular job or run another business simultaneously.