08 Sep, 2017

Master Franchise Agreement

A master franchise agreement is a relationship between a franchisor in one country A and a master franchisee to open franchises in a different country B. In country B, the master franchisee will be the franchisor and not a franchisee. This arrangement favors the master franchisee in that it gives him the opportunity to grow his business rapidly. All franchisors do not use this method but those who do develop very fast. Under the master franchise agreement, the master franchisee will buy the franchised territory in country B. the revenues from this territory is shared with the franchisor. The right to approve the sub-franchisee rests with the franchisor. The franchisor will give training to the master franchisee who will in turn train the franchisees on how to run the business. The franchisor may train the franchisees directly without involving the master franchisee. The master franchisee may be called upon to offer operational support to the franchisees. This arrangement is of advantage to the franchisor because the business is already developed and put in place. The master franchisee gets to enjoy advanced technological systems and any other backup support as he may need. A master franchisee agreement offers an opportunity for faster growth than an ordinary franchise. The master franchisee also keeps enjoys a share of the initial fees just like the royalties the individual franchises pay. In some cases an override on the goods in distribution can be earned by the master franchisee. It is not often to find a master franchise, but when available care should be taken to know clearly what is involved before hand. Make a thorough research to ensure the opportunity is in line with your interests and objectives. You can take your research further by interviewing master franchisees who have excelled in this area. Where there is no one to interview your local library and the internet are a source of valuable information. Master franchising is an excellent way of franchising though the initial cost may be a bit stiff. It offers better returns on investment than investing in the stock market, setting up new or even purchasing an on going business. The only catch is to be sure to buy into a credible franchise system. In the United States master franchise agreements are becoming less popular and their place is being taken by Area Development Agreements. However, they are still being utilized while venturing into the global market.