The Difference Between A Master Franchises And A Normal Franchisee

Especially In Franchise Business: Have you ever think of a master franchisee? If you are thinking of a master franchisee for your business, it means you are surely thinking to expand your business internationally. If you want to expand your business overseas and you don’t have resources for that. In this case, master franchising concept is just a right choice for you.
 
Master franchising is a way to add the business entity of some other location to your list to help you expand your business in some other territory. By reading this, you must be thinking what is the difference between a master franchise and a normal franchise arrangement?

What Is A Master Franchisee?

A master franchisee is more like a sub-franchisor who bear all responsibilities for a designated geographical territory. It is best to say that a master franchisee is like a franchisor for the franchisees.

A master franchise defined by The Franchising Code of Conduct is a franchise arrangement in which the franchisor grants the rights to a master franchisee:

a) To participate in a sub-franchise

b) To grant a sub-franchise

A Master franchisee structure inside Franchise Business:

The master franchise agreement

As compared to franchisee, a master franchisee will have greater rights by virtue of the fact that they can sell the license of the business to the sub-franchisees and because of this, a master franchise agreement needs to drafted carefully with the rights of a master franchisee in relation to your intellectual property, in addition to the following:

  • Training of sub-franchisees
  • Development criteria
  • Approval by you of sub-franchisees
  • The form of sub-franchise agreement to be used
  • An outline of your supply arrangements

To ensure the correctness of master franchise agreement, it is always good to take the help of master franchise lawyer to draft it.

As the master franchisee is helping you in expanding the business and also dealing with the sub-franchisees, they also deserve to get a share of the royalty paid by the sub-franchisees. In normal circumstances, a royalty fee is usually paid to the master franchisee and he is the person who will remit a portion of royalty back to you.  If you are thinking to expand your business in America, you should contact an American Franchise Lawyer to know the expansion chances of your business. 

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