5 fundamentals to running a master franchise business

17/08/2023 Venners Ltd.

“A successful master franchise business is worth its weight in gold. Specialist insight and backing can help your business reach its full potential. The franchise business is a complex one but if you build the right network and focus on doing everything you can to help strengthen your franchise family you will see your franchise business going from strength to strength. We are always here to offer a helping hand no matter where you are in your franchise journey.”
– Duncan Colvin, Head of compliance, Venners

Master franchise business fundamentals

Running a master franchise business is a difficult but rewarding feat. You may have been appointed as the master franchisor, by a franchise brand owner based in the US, and are now in charge of rolling out a successful UK franchise family. Or, this may just be the beginning of your journey. After having grown your own business successfully, you are now conceptualising it into a new franchise brand born in the UK.

Alternatively, you might have been in the franchise business for years as a franchisee. Having purchased multiple franchise sites across the UK over a number of years you now find yourself in a position of being the head of a growing network .

Whichever one of these scenarios applies to you, the outcome is the same. You are in the driving seat of running a master franchise business in some capacity or other and aim to make it as successful as possible. It is time to make sure that you are fully prepared for everything that comes with this exciting responsibility.


1. Set your own internal standards

When you invest or launch a franchise brand, you will be buying into or creating a business model that you know already works. It is then about fully committing to the brand you have invested in or created, whilst putting your own stamp on how you effectively run your own master franchise.

Any well-established master franchise business will have to comply with the franchise brand owner’s standardised Policies and Procedures Manual. Following this as closely as possible grafts your franchise family into the franchise brand firmly, setting them up for success. However, establishing your own set of internal policies and procedures is equally important!

Before you do anything else, make sure you know exactly what level of control you need to have as a master franchise to stay on track as your franchise empire continues to expand. The truth is, despite the level of control a franchise brand owner has over you at the top level, it will be up to you to enforce your own controls and standards framework to run a truly successful master franchise.

Securing further finance throughout your journey will be easier if you can show how you plan to implement effective and scalable controls within your existing business.


2. Closely monitor expansion projects

If your franchise business is doing well, you may find yourself in a position where the business is growing rapidly. This is all well and good, but you should focus on trying to maintain an expansion rate where you can monitor it effectively. Before you engage with rapid expansion of the franchise portfolio, make sure you know how to control compliance standards and keep them consistent.

You will notice that with more sites comes more opportunity to stray from the franchise brand you are dedicated to as a master franchisor. Despite every site officially running to the same standards, staff members at each site will have varied backgrounds and work experiences. They will by default do things in their own way, prioritising different aspects of the business and creating their own culture.

Be prepared that these differences will result in each site executing your operations manual slightly differently. That is ok, but it will be up to you to find some way of making sure the core brand and operational standards are implemented in the same way across all of your sites. The profits of any franchise business are inextricably linked to everyone working towards the same standards in the same way.

Particularly as your master franchise approves the opening of new sites, you will need to ensure that they follow your compliance standards from the very beginning.

It is easy to assume that during the start-up phase franchisees can be too busy with other things to fairly monitor standards. However, testing standards early on is essential to ensure that no bad habits solidify in the moments that matter most. We recommend you audit new sites within the first 2 to 3 weeks of opening.


3. Regularly audit all your sites

Master franchise owners should ensure that levels of compliance and control also grow as the business expands. It is recommended to perform regular compliance audits for each individual franchise site to make sure that your internally set standards are being met. These compliance audits will help you analyse and protect the overall health of your franchise business through regular reporting.

You will want to receive compliance reports on the most important areas, including retailing, brand, customer service, security, payments, revenue, royalties, sales, cash and banking. Making all these business elements part of a regular compliance audit will give staff a clear picture of the tasks that should be prioritised.

You can also isolate each business element to compare real-time findings to those figures reported by your sites. For example, you could reconcile a sales and royalties report that is submitted monthly by each franchise site with the respective EPOS data to highlight any variances.

Over time you can compare audit data against previous reports and different sites, making it clear which of your sites are most compliant and which are in need of more support.

However, in our experience different pressures and external influences can see standards slipping at any time, so ideally, no site should go un-audited for more than 2 months at a time. Without regular checking and monitoring of your franchise sites, it becomes impossible to run a master franchise business effectively.


4. Introduce best practice training.

Investing in high quality best practice training for your franchisees and their staff gives you a solid foundation to becoming a successful master franchise business.

Regular training will ensure your franchise family is continuously growing and evolving, therefore enhancing the customer experience and your profits! It also pre-emptively protects you from receiving any poor results if your franchise owners audit your master franchise business unexpectedly.

It really is important to pay close attention to how your franchisees are operating and periodically assess training needs. This way you can help franchisees decrease staff turnover. Staff too will feel the benefits of practical and professional development, whilst maintaining a high service quality, overall operational excellence and positive view of the brand your master franchise presents.

If best practice training is not made a priority, this could severely affect a customer’s perception and the reputation you have to protect. If a customer has a negative experience in one site, this could dissuade them from visiting other sites in the future.

They may even talk to their friends and family, influencing the visiting decisions of others around them. The ease with which customers can now leave reviews online too can escalate these negative opinions about your brand. This can hurt the profitability of your master franchise business.


5. Solidify your franchise network

Any successful master franchise business will enable ongoing success by linking with the right network.

Joining strong franchise organisations such as the British Franchise Association and The Franchising Centre will help your business stay up-to-date with industry trends, allow you to exchange knowledge, and enable collaboration on common challenges with others in the industry.

Other organisations that could be useful in providing valuable insights and new opportunities for growth could be hospitality based associations, such as UKHospitality and the BII.

Beyond joining these overarching associations, make sure your master franchise itself also offers a similar network alliance for its franchisees. You can use this as a platform to promote and report on any successful initiatives by other franchisees. This can include the need for engagement with local communities and charities in order to build stronger connections with their target audience.


Protect your master franchise

It takes a lot to become a successful master franchise business, but there is plenty of help and support around to get you there. Once established, you need to make sure you are equipped to keep your business in that positive place.

As long as you focus on keeping operational standards high by regularly monitoring and improving them, you should be able to stay on track. Create a roadmap as a way to monitor performance and maintain standards.

If you are looking to see growth as a master franchise business and aim to oversee hundreds of sites, it is important to be able to present a strong business plan that represents a well-maintained, consistent brand to the public.

After all, your guests will be less inclined to spend money or become a returning customer if each time they visit one of your sites they encounter an inconsistent experience.