In the world of franchising there are several terms to get familiar with. Unit refers to a single standing franchise. Territory usually pertains to a geographical area with a certain population that the franchisor determines. Area representative is someone who helps recruit individual franchisees and helps with driving the franchisees business forward. Usually an area represented will have a large number of franchisees to manage – from 20 – 80. A master franchise acts just like the franchisor; they are assigned a province, state or country and it is their role to find franchise partners and drive their business forward. What is the primary difference between an Area Representative and a Master Franchisee? An area representative is not allowed to enter into any agreement with the identified franchisee in its territory, and the franchise agreement is executed by the franchisor and franchisee, with the area representative merely facilitating the identification and recruitment of potential franchisees. In the case of a master franchise model, the franchise agreement is signed between the master franchisee and the franchisee.
Although the franchisor is losing out on a fair amount of revenue, many franchisors will decide to go the area representative or master franchise opportunity route. With the area representative model, companies can build a national sales team across the country with committed local entrepreneurs very quickly. When crossing boarders most companies will adapt the master franchise model over an area representative model for reasons such as different laws and agreements, and liability protection. Several companies that have adapted the master franchise route when expanding into Canada include Dominos Pizza, Subway, PostNet, Quiznos, Century 21, the list goes on,…
A company that has experience with managing area representatives is Always Best Care. They have an unusual structure for the seniors care industry throughout their 194 territories; they have 25 area Representatives who help in the recruitment and management of their respected franchisees. Each area representative has a population between 3 million and 12 million and has the ability to divide their territory into 225,000 population units that are granted to individual franchise partners. “By having area representatives we have savvy business people that are invested into the business and will ultimately be more loyal and work harder than a territory manager would.” Says Jake Brown COO of Always Best Care. Their area representatives earn 50% of the proceeds of the franchise fee and royalty. The model looks to be working well – with 194 units granted in just over 5 years, and sales reaching over $70 million last year. “The most important component is that our business can facilitate the operation of a franchise partner, and can facilitate the business of our area representative partners – we have happy franchisees buying more units, and area representatives buying more territory.” Brown adds.
Always Best Care has been supporting area developers for the past 5 years and understands the infrastructure needed to have their business thrive. With the experience of supporting area developers Always Best Care feels confident with supporting a master franchisee in Canada as they begin their search for the qualified candidate. They have their eyes set on the international stage with potential master franchisees coming on in Germany, Australia, and England.