E Pluribus Unum - Out of Many, One

Under sub-franchise agreements, a franchisee collects royalties and royalties and may be responsible for the recruitment, training and support of under-franchiseds in a given territory. The decision to become a franchisee master can be lucrative, but it also involves additional responsibilities and risks. For example, if you are unable to meet your contractual obligations, the franchisor may fine you and your contract may be terminated. Before entering into a franchise agreement, it is important to speak to a franchise lawyer. The franchisor may grant a franchisee the creation of sub-franchises within a given territory. This franchisee is referred to as “master franchisee,” while newly created franchisees are “under-franchised.” The provisions for this agreement are defined as part of the franchise framework agreement. The same terms of the franchisor`s standard franchise agreement will operate under the sub-franchise contract, although the agreement is between the principal franchisee and the under-franchised. Regardless of the above, master franchises, sub-franchises and development agents have more differences than similarities. A franchisee is a person who has the right and sometimes the obligation to sell franchises on behalf of the franchisor.

Often, the franchisee is required to own a number of franchises and fulfill its obligation to sell additional territories to new franchisees. You can imagine a franchisee as an intermediary to help the franchisor sell franchises and, in return, be compensated by a cut of each sale. A franchisee master is not considered a development agent. The main difference between the two figures is that a development officer will never make a franchise; In other words, it is not granted with a franchise and the right to operate a franchise, which the principal franchisor can do either directly or by granting that right to a sub-franchise. Having a development agent can offer the franchisor several advantages, including (i) obtaining knowledge and advice about the franchise market and the laws of thought in the territory concerned, which can facilitate the expansion of the brand; (ii) to have a point of contact in the territory to promote the franchise activities in question; and (iii) at the request of the franchisor, the development representative may perform certain activities normally carried out by the franchisor, such as inspection visits, training and technical assistance. In some jurisdictions, franchisors must provide franchisees with certain information obtained through the service of a disclosure document prior to the granting of a franchise. This publication document must be notified by the franchisor to the potential franchisee prior to the date of the franchise agreement. As a general rule, disclosure documents for franchised transactions must be disclosed to the potential franchisee the technical, economic and financial information of the franchisee. When choosing the franchisee, the franchisor retains the exclusive power to decide the future of your franchise`s franchise in terms of regional or international expansion. Typically, subfranchising is used to reach new markets. The franchisor will no longer be able to support these units as it would have liked with national or local franchises; As a result, under-franchise agreements are needed.

 

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