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Question added to topic FranchisesAugust 22, 2011

How Do Master Franchise Owners Get Paid?

Are master franchisees that are hired by the franchise companies paid normal, fixed incomes or do they only receive sales commissions? How does this work? What are some of the positives and negatives of being a master franchisee, as you see them? Any tips you have are appreciated.
A master franchisee is typically someone who enters into a contract with the franchise company to help them sell and service individual franchisees in a large and well-defined area. This is usually a metropolitan or statewide territory.

The master normally gets a cut of all the money that flows from the individual franchisees to the main franchise company -- most often around half. This could include initial franchise fees, ongoing royalty fees, training fees, real estate or build-out assistance fees.

The master is not an employee of the franchise company so there is no salary or other fixed income. They are paid strictly as they produce revenue for the main company.

The main difference between being an individual franchisee and a master franchisee is in defining who your customer is. For the franchisee, the customer is the consumer that buys the product or service from the business.

For the master, the customer is the individual franchisee. The master spends his or her time focused on creating success for the individual franchisees so the business can grow through their increased volumes.

Related: Sizing Up a Franchise in Six Steps
Related: Franchise Slashes Fees to Spur Jobs

Jeff Elgin has almost 20 years of experience franchising, both as a franchisee and a senior franchise company executive. He's currently the CEO of FranChoice Inc., a company that provides free consulting to consumers looking for a franchise that best meets their needs.

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