What is the Difference Between an Area Developer and a Master Franchisor?

Posted on June 09, 2011 by Farrah Kennedy

There are several different types of franchise ownership, from the simple franchisor-franchisee relationship to area developers and master franchisors. While all of these types of franchise ownership vary greatly in their structure, the same basic principle applies; the franchisor creates the product or service, develops it into a franchised system and then allows the franchise owner to replicate the business model for a fee and an ongoing royalty. This system works well around the world, allowing franchise owners to capitalize on the proven success of the franchisor's business, but knowing the difference between the different types of franchise ownership is a critical piece of information for anyone considering the move into franchise ownership.

The role of a master franchisor is essentially a manager of franchisees. The typical business relationship is Franchisor > Master Franchisor > Franchisee. A master franchisor is not employed by every franchisor, but as a franchise system grows larger and larger, the master franchisor plays a critical role in ensuring the success of the franchisee in a system where the sheer number of franchisees can cause individual franchises to slip between the cracks.

National Master Franchisor
In a national master franchise, the master franchisor typically takes on the role of bringing a franchise to a new country and subsequently facilitating the opening and overseeing the operations of all of that country's franchisees. The master franchisor receives in-depth training from the franchisor on how to replicate their system, and then passes this training along to the team of franchisees. Additionally, a national master franchisor will typically act as the middleman between the franchisees and the franchisor, helping the franchisees with problems that arise throughout the course of opening and running the business, making it much easier for individual franchisees to get the attention and assistance they need for a successful business.

Regional Master Franchisor
A regional master franchise is similar to its national counterpart, but will often have a much closer relationship with the individual franchisees. Regional master franchisors make sense in countries where there are a high number of franchisees and the management and oversight can be broken down into specific regions. In this type of system, there will often still be a national master franchisor that leads the regional franchisors, providing several levels of leadership, streamlining the franchise process by allowing only the toughest of problems to be escalated up to the franchisor.

Area Developer
Similar to the regional master franchise, an area developer is given the rights over a certain territorial region for the franchise. The main difference is that an area developer will typically run and oversee all of the franchises within his or her area. The area rights from the franchisor will often be for a set number of franchises, rather than just an unlimited amount within the area. One of the key advantages to area development is a closer relationship with the franchisor. The area developers are seen by the franchisor as a sort of "super-franchisee", proving that they have the skills and cash-flow to open multiple locations and keep them profitable.

If you're not sure which role suits you, the best way to find out is to get in contact with your franchisor. For all three roles, franchisors will want to see you successfully open and operate at least one franchise, prior to making the jump to an area, regional or national operation, so qualified candidates should already have a working relationship with the franchisor and will have several points of contact within the organization to best figure out the next steps.