Mater Franchise Strategies and transfer issues; Case Study

There are many ways to extend the brand into a franchise. The objective is to do this is as fast as possible, while maintaining a strong family franchise. Systems often will choose a strategy franchise master franchise, so they sell their rights to others within a region to sell new franchises.

This strategy works well for both parties and provides significant financial incentives for the Master franchise partners. However, once all parts are sold within the territory of the region responsible for the master franchise agreement, then the master franchise has less financial incentives and generally receives only a percentage of the royalties of current franchisees. At this point the master franchise will often sell their rights back to the franchisor or other entity.

The first time I had to do with such a situation I found it necessary to set specific limitations and requirements throughout the transfer. Then I decided to include these limitations and provisions of the master franchise agreement prior to the allocation. Below is a copy of the clause in the contracts that came;

5.7 Transfer of Master Franchising

Master franchisee may not sell, directly or indirectly, pledge, assign, transfer or convey any interest in the Master Franchise without the prior written consent of Franchisor. In connection with any sale, transfer or assignment of the Master Franchise, the following requirements for Master Franchisee (transferee) must be met to the satisfaction of Franchisor as a condition for the transfer:

(A) The assignee shall, at the time of such assignment or transfer, be financially and economically able to carry out the objectives Franchisor in this Agreement and Franchisor franchise business plan development.

(B) The assignee shall expressly assume and agree to perform such obligations and sign a binding agreement with the Franchisor.

(C) The assignee must be trained and pass Franchisor Franchise Special Master training.

(D) The assignee must be competent and subject to a 30 (30) 60 (60) calendar days from the Franchisor opinion before a transfer to them.

(E) The assignee must execute their franchise "Guys Car Wash" for at least four (4) months before the transfer.

(F) The assignee must own and operate a unit of farm shop for the duration of their franchise in an area other than designated areas of Master Franchisee of marketing their area, but in the same general region of their master franchisee area.

(G) The grantee must be able to provide all the ongoing support to franchisees under this franchise agreement.

(H) The grantee shall participate in any organization franchisee training, trade union or association meetings in their area of ​​the master, which have been officially recognized by the Franchisor, provided that affiliates want the Master Franchisee to be there and that their affiliates Master Zone are a member.

(I) The assignee must keep on hand at least one member of the regional team and a truck on loan for franchisees every twenty (20) in their assigned area master.

(J) The assignee must sign a covenant not to compete with the master franchisee in their area do not use their own farm shop in the areas of Marketing Master Franchisee in their area unless they were invited to a franchisee in case of vacation or injury .

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In case of expansion of a franchise through master franchise would do well to consider these things. You will need to consult with an attorney to make sure that this franchise is done properly and in your interest and you should ask them about these issues. I hope you will consider this in 2006 .......