Franchising allows local businesses to increase their market share by penetrating new locations or markets, particularly in lucrative regions–such as the U.S. A master franchise operates like your ordinary franchise, but slightly different. In a master franchise, master franchisees assume the role of a franchisor in their territory.
The master franchisee acquires exclusive rights to train and support new franchisees, just like ordinary franchises. If you’re considering a master franchisee in the U.S.A, you should consult a franchising attorney to guide you through the process of establishing your brand in the U.S.
Franchising in the U.S
Before selling franchises in the U.S, you should comply with franchise laws, including state and federal laws. Franchise law requires franchisors to issue a pre-sale disclosure, also called a Franchise Disclosure Document, to prospective buyers (franchisees).
An FDD should be issued in adherence to franchising law. In some jurisdictions (Registration States), the FDD is submitted to a state administrator for review before registration. A registered FDD must be issued to prospective investors 14 days before signing any commitment.
Disguised Franchising
A business arrangement that fulfills all the requirements of a franchise under state and federal law is considered a franchise for all intents and purposes, even though they may disguise the business relationship as a license agreement.
Surviving as a Master Franchisee
Ensure that you have enough capital to survive the beginning of creating a new master franchise. Success does not come overnight, and it will require time and effort to realize a successful master franchise. The initial difficulty will be to recruit competent franchisees to be part of the system.
Rewards of a Master Franchise
The reward of master franchising is two-fold. You’re entitled to a share of the franchise fee and a percentage of monthly royalty. As your territory grows, your share of the monthly royalties increases.
Characteristics of a master franchise
The features of a master franchise include:
If you are considering national or regional investment projects, a master franchise could be the perfect idea. With the right partner and a master franchise agreement attorney on your side, you can negotiate a lucrative deal.
