Typically a franchisor will appoint master franchise licensees when expanding the franchise network internationally. In this model the two parties will enter into a franchise agreement where the franchisor grants the master franchise licensee the right to sub-franchise in that specific area.
The role of the master franchise licensee is to expand the franchise network in that specific area and takes on the role of supporting and training the sub-franchisees to deliver the service using the franchisor’s system. The master franchise licensee usually has the right to open one or more franchise units itself.
The master franchise licensee becomes the sub-franchisor, representing the franchisor in the specific area and the unit sub-franchisees that it recruits, each enter into sub-franchise agreements with the master franchise licensee. There is usually a mandatory development schedule that the parties will agree on requiring that a certain minimum number of unit franchises be opened by the master franchise licensee each year.
The relationship of a master franchise licensee to its sub-franchisees is very much like the relationship of the franchisor to its single unit franchisees.
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