Master Franchise and Master License

Master franchise or license

agreements allow the owner of a trademark operated on its national territory to export its concept by entrusting its development on a specific territory to a master franchisee.

The master franchisee is a sub-franchisor, intermediate between the franchisor and franchisees. It benefits from territorial exclusivity in a geographical area defined by a master franchise agreement. This geographical area is important and the master franchisee’s mission is to select and franchise the activity in this area, under the terms of a contractual development plan (number, characteristics and schedule of openings). The duration of the contract must be sufficient to allow the master franchisee to develop the brand and amortize its investments. It is often set at 10 years, or more. The master franchisee is then the co-contractor of the franchisees in its exclusive territory.

The master franchise makes it possible to set up a brand in markets unknown to the network and in which the implementation of the concept may require its adaptation, which a local investor is often best able to do, under the strict control of the brand. It is a solution wherever the branch or direct franchise development of the network would generate too great risks or could not be carried out quickly.

The construction of a master franchise contract incorporates most of the provisions of a classic franchise contract. A large entrance fee is generally provided for the acquisition of the master’s degree and part of the fees collected are frequently paid to the brand.

The master franchisee is the only contact for the franchisee who has no relationship with the franchisor. The franchisee therefore has no recourse against the main franchisor. The assignment and termination clauses must be particularly protective of the main franchisor, who must ensure that it can recover the network developed at the end of the contract.

This system is now very successful and has allowed many French brands to establish themselves abroad and to grow rapidly. In some geographical areas, such as the near and middle east, there are investors operating several master franchises and having strong investment and management capacity.

The differences between the master franchise and the master license are identical to those that may exist between franchise and license.