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Master Franchising – what do I need to consider?

Sarah Stowe

Master franchising is most commonly used for international expansion. For example, US franchisor decides to expand to Australia, so finds an appropriate business partner in Australia to licence its brand for expansion in Australia. Equally, Australian franchisors might wish to expand to New Zealand, US, UAE etc.. and rather than granting individual franchises in those franchises they look for a business partner to take the role as the local ‘franchisor’ of the brand. Master franchises tend to be for relatively longer periods than an ordinary franchise agreement to enable the master franchisee time to obtain an appropriate return on investment. Important provisions to consider in such agreements include territory development obligations, division of marketing responsibilities, the ability to tailor the system to local conditions, responsibilities for intellectual property registration and protection, etc…