Master Franchise

The master franchise is a business development formula adopted by most franchisors. It 'a technique whereby a franchisor grants to another person, called the master franchisee the right, in a given territory, to exercise powers normally reserved to him. Usually the master franchisee has the right to offer and recruit franchisees, to sublicense to use the franchisor's trademark, to collect royalties from franchisees and provide services on a regional or local level. The franchisor assumes broader responsibilities such as publicity internationally and the annual meetings of the franchisees.

The contract
The Master concludes a “subfranchise” contract with the franchisor: in turn, the Master enters into franchise contracts with franchisees. The form and content of franchise agreements are usually prepared or approved by the franchisor, although in some cases the subfranchisor has considerable flexibility to decide what form will be used. This method allows a rapid expansion in the area. As positive points of the acquisition of Master license must be emphasized especially the reduction of risk in new business through exploiting the known brand, operating mode experience, the assistance of the franchisor's headquarters, the facilitation of obtaining funding and participation in training courses at headquarters where the company transfers the necessary know-how to conduct business and manage the network. The great competitive advantage also comes from advertising done by the franchisor internationally and the experimentation, research and innovation of products and services. For a franchisor the advantages of the formula are manifold. But what are the key elements of the licensing agreement for the Master?

In detail

  • The right to use the brand and know-how
  • The territorial exclusivity clause
  • The description of the activity, consumers’ targets for products and services
  • The right to sign contracts with franchisees
  • Network Development Plan
  • The duration of the license and right to extend or transfer the license
  • The description of the training and services to the Master
  • Payments: master fees, advertising, other fixed payments
  • Assignment by Franchisor
  • Assignment of contract by the Master

It is a formula suitable to those countries where potential development is interesting. The company has the responsibility of defining the international package, of preventive monitoring of the local market and a dedicated business plan. The master franchisee is responsible for testing locally and feed back to the last possible remedies to be determined by the franchisor. The company provides support in terms of brand, training and support for staff  of the master franchise company. The master franchisee must have a solid business, organizational and marketing skills.


What should the master franchisee do?

  • Obtain information from international bodies, Ice, foreign chambers of commerce, skilled professionals, media and specialized events
  • Perform an initial screening by comparing the different business formulas with particular focus on transparency in the process of disclosure, namely pre-contractual information, the quality of the business plan of the area you should develop and in general
  • Assess the potential of the area to be developed, and to ascertain the actual consistency between the guidelines of the business idea and the local target, intended both as a set of potential sub-affiliates and of end-users
  • Check own business skills (financial, organizational and marketing)
  • Ensure the rights and obligations
  • Check what happens if you break the contract
  • Evaluate the condition of exclusive and non-competition agreement.
 
azexpotour