The Master Franchise Agreement is a sophisticated legal instrument used when a franchisor wishes to expand its business through a master franchisee who will develop and manage sub-franchisees in a designated territory. This agreement type is particularly relevant for businesses seeking rapid expansion across large geographic areas while maintaining brand consistency and quality standards. The document, governed by U.S. federal and state franchise laws, comprehensively addresses territorial rights, development schedules, fee structures, operational requirements, and the complex relationship between franchisor, master franchisee, and future sub-franchisees. Master Franchise Agreements are especially crucial for international brands entering the U.S. market or domestic brands expanding into new regions, as they provide a structured framework for multi-unit development while ensuring compliance with various regulatory requirements.
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1. Parties: Identifies the franchisor and master franchisee with full legal details
2. Background: Outlines the franchise system and purpose of the agreement
3. Definitions: Defines key terms used throughout the agreement
4. Grant of Rights: Details the territorial rights and scope of the master franchise
5. Fees and Payments: Specifies all financial obligations including initial fees and ongoing royalties
6. Obligations of Parties: Lists responsibilities of both franchisor and master franchisee
7. Term and Renewal: Specifies duration and renewal conditions
8. Intellectual Property: Covers trademark usage and protection of system assets
9. Termination: Details grounds and procedures for agreement termination
1. Development Schedule: Timeline and requirements for opening sub-franchises when specific growth targets are required
2. Training Provisions: Details of training programs and requirements when franchisor provides specific training obligations
3. Supply Arrangements: Product sourcing requirements when specific suppliers or products are mandatory for the franchise system
1. Territory Map: Detailed map showing exclusive territory boundaries
2. Operations Manual Table of Contents: Overview of operational procedures and requirements
3. Fee Schedule: Detailed breakdown of all applicable fees and payment terms
4. Brand Standards: Specifications for maintaining brand consistency across the franchise network
5. Required Equipment/Inventory List: Specifications for required operational items and inventory standards
6. Form of Sub-Franchise Agreement: Template agreement for use with sub-franchisees in the territory
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