What Is A Master Franchise Agreement

In many cases, the franchisee master is required to use the franchisor`s standard sub-franchise contract and to ensure that it complies with local (compulsory) laws. Another possibility is that the principal franchisor has the right to design a standard sub-franchise contract, provided that this standard contract includes a number of clauses considered binding by the franchisor. The search for a qualified master franchisee for international expansion saves a franchisor the costs (and headaches) of building an infrastructure abroad to sell, train and support franchisees. The partnership with a qualified foreign franchisee also solves the problems of linguistic and cultural differences, as well as the search for local collaborators, suppliers, real estate, etc. Under-franchise agreements must reflect the main terms of the main franchise agreement, or even the form of a sub-franchise agreement may be attached to the franchise framework agreement. In addition, the franchisor reserves the right to authorize sub-franchisers and the site where each sub-company is developed and can dictate the economic relationship between the main franchisor and its sub-franchisers, including royalties and other royalties. (r) furthermore, not to acquire financial stakes in the capital of a competing company that would give the franchisee the power to influence the economic behaviour of such a business. Finally, it is important to emphasize the need for patience, understanding and reasonable expectations throughout the education and ongoing performance of a master`s relationship. This article deliberately focused on pre-sale negotiations and contracting, because I strongly believe in the adage “An ounce of prevention is worth a pound of healing.” It is much easier to establish transparency and reconciliation when these principles are emphasized by both parties during their initial interactions and incorporated into the DNA of documents that recall how the parties will work together during the development period. The third pillar is effectively distribution and sourcing, especially in retail or restaurant concepts, which involve the sale and distribution of own items or brands. Of course, there are different ways to set up distribution in a particular jurisdiction, including: a) the master and his sub-franchisees purchase from the same suppliers that the franchisor uses in the United States.

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