The master franchising is a great option to get someone else involved to help you develop your franchise system in a particular area – but what`s the difference between that and a regular franchise agreement? A regional promoter is a person or company that executes a development contract with the franchisor. Under this agreement, the franchisor grants the developer of the territory the right to develop the franchise business in a defined territory, as well as to open a franchise entity, a specific franchise agreement must be concluded. Typically, the developer executes such a franchise agreement directly or through a joint venture with a third party. Development agents, on the other hand, do not execute a franchise agreement with the potential franchisor or franchisee; A franchise agreement is concluded between the franchisor and the corresponding franchisee proposed by the development agent, who in turn would be entitled to a commission. Franchise agreements may contain all the provisions convened by the parties, provided that they do not violate applicable laws, public order and morality. Either way, master franchises, sub-franchises, and development agents have more differences than similarities. Master franchise agreements often include a development plan that requires the primary franchisee to develop a certain number of franchise units within a given period of time. Franchise master agreements often include default, termination and fines for the franchisee in case of non-compliance with the development plan. In addition, it is common to include in franchise framework agreements provisions that allow the franchisor to terminate the exclusive rights of the main franchisee in the event that the main franchisee does not comply with the development plan, or even to terminate the contract without liability. By industry standards, a franchisor often transfers to the primary franchisee the right to grant a sub-franchise and sublicense the brands and use the system to operate franchise units in that territory to a third party, the so-called sub-franchisee. A primary franchisee typically has more rights than a regular franchisee because they can relicens your brand to sub-franchisees. Therefore, a master franchise agreement must pay attention to a primary franchisee`s rights with respect to your intellectual property, as well as the following: In addition, the primary franchisee assumes a difficult role as he or she must assume many of the responsibilities associated with the franchisor, such as recruiting other franchisees in his designated territory and assisting in the development of his business. Of course, there are also some drawbacks of the main franchise model.
A framework franchise agreement is an agreement entered into by and between a franchisor and a primary franchisee, where by which the franchisor grants the primary franchisee rights to the franchise and license, (i) intellectual property rights, including but not limited to trademarks, manuals and “know-how” (franchise system) to develop, establish and operate franchise units in a particular jurisdiction; and (ii) sub-franchise and sublicense the Marks and the franchise system to operate franchise units in that territory […].