Noticias de Franquicias
Mayo 3, 2011
Master Franchises with Lower Introduction Cost in a New Market
Successful businesses looking to expandSuccessful franchises, confident in the service or product they sell have the required and accurate know-how, as well as proven results, and are seeking to expand faster than with individual franchises. That is why Master Franchises have been created.
How does it work?
In this type of franchise, the franchisor provides the Master Franchisee the power to exercise the administration of the Company’s franchises, in a country, state or in a region, acting in the name of the Company. Meaning, signing franchise contracts, broadening or revoking franchises and providing technical, administrative or training support as provided by the original company, in other words, transmitting the knowledge on how to do the subject business.
This type of franchise was used to enter different countries where the socio-economical, legal and marketing situation made easier such introduction.
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Main advantages of the Master Franchise
The advantages from the Master Franchise system are many.
To mention a few, we have the lower introduction cost in a new market, as well as to avoid the increase in the structure of the company seeking to expand, and less paperwork since the Master Franchisee is the one taking care of the local paperwork in the new market.
Terms and conditions in a Master Franchise contractIn the contract subscribed by the Franchisor Company and the Master Franchisee, it is important to establish certain points that will make predictable the relationship avoiding problems, and the loss of time and money. These are some of the most important points to take into account:
- The contract should establish the commitment to a fixed payment fee to the Master Franchisee and a royalty payment corresponding to a percentage of the franchises the franchisee granted.
- The franchisee should assume the commitment of not participating in any activity that might compete in any way with the original franchise.
- On the other hand, the contract terms, usually calculated as the time the Master Franchisor takes to recover the investment with a proportional profit to the investment, subject to a research or including a conditional clause at the completion of such objective. That doesn’t impede the automatic renewal of the contract, giving priority to the franchisee.
- Additionally, in their contracts with their franchisees, the Master Franchisee should establish that given the completion of his/her contract or a resolution in his/he contract, by any reason, the franchisee will assume the obligation with the original Company or its designee to continue with the original contract.
- The Master Franchisee should sign a non-disclosure agreement in regards to the know-how of the business, as well as require such agreement with the franchisees he/she will incorporate.
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Consider the possibility to become a Master Franchisee
To know more about this business opportunity, please contact those who know more about the franchise businesses conditions; your consultation will be received and answered by our professional staff, which will solve all your concerns, at no additional cost, not now, not in the future.Otros artículos del mismo mes