These pros and cons must be carefully weighed and weighed before the franchisee engages in the master franchise model. Once promoted, however, a profitable business should have no trouble finding potential master franchisees, as the master franchise system is an attractive concept – the master franchise for an entire country is often lower than the cost of buying a single franchise. You need to be sure that the franchisee has a robust international development program, backed by a comprehensive business plan. Are you happy that the franchisee has done adequate market research? Can you be sure that your product or service is accepted in the destination country? If the franchisee has not done their homework, they have no way of knowing if a master franchise network will succeed in another country, which increases the likelihood that master franchisees (and sub-franchisees) will suffer immediate losses. The Master Franchise Agreement is different from a regular franchise agreement. How are these two different? What should I pay attention to before I can sign the franchise agreement? Keep reading to learn more. The geographical area allocated to the master franchisee should be clearly defined. The parties may opt for an extension or reduction of the territory, depending on the achievement of specific and clearly defined objectives (either in terms of turnover, the number of sub-franchise units opened, or a combination thereof). A development agent can offer several benefits to the franchisee, including: (i) gathering knowledge and advice about the franchise market and the laws in the relevant territory, which can facilitate brand expansion; (ii) to have a contact point in the territory to promote the franchised activity concerned; and (iii) if the franchisee so wishes, the development agent may perform certain activities normally performed by the franchisee, such as. B inspection visits, training and technical assistance. A development agent is, from a legal point of view, an agent of a franchisee in a given territory in which an agency contract is entered into to settle that relationship; in this case, no deductible is granted by the franchisee.
The above principles should be included in most franchise agreements, as many countries do not regulate franchises. Franchises are not regulated in all countries. Where a franchise agreement is concluded in an unregulated franchise jurisdiction, that agreement should comply with international commercial standards applicable to franchises. International commercial franchise standards have been developed by countries that have developed franchise systems and rules that require the franchisee to comply with the mandatory provisions of the franchise agreement. The main difference between under-franchising, master franchising and development agents is that sub-franchise and master-franchise agreements grant a license and franchise for the use and exploitation of intellectual property rights and that technical assistance and know-how are provided. In the meantime, development agents execute an agency contract under which no license or franchise is made available. . . .