Master Franchise

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Master Franchise Agreement Bundle

Master Franchise Agreement is popular with service franchises. Service franchises are those which involve the franchisee selling services rather than goods. Service franchises are common in the home services, cleaning and courier industries. Often there will be no retail premises involved, with the franchisee operating from home. The use of a vehicle will be a critical element of the franchise.

Master Franchise Agreement 

A feature of service franchises is the high number of individual franchisees. To avoid creating a
large head office bureaucracy master franchising can be used to delegate the responsibility of
growing, developing and monitoring the network in a territory to a master franchisee.

The grant of a master franchise is very similar to the grant of a franchise. However, the terms of
the master franchise and the responsibilities of the master franchisee are different from those of a
franchisee. A franchisor must provide a master franchisee with a disclosure document, a cooling
off period and other arrangements applicable to franchisees under the Code.

Master Franchise Agreement Bundle Includes:-

  • 1                Definitions
  • 2                PRIMARY COVENANTS
  • 4                GRANT OF MASTER FRANCHISE
  • 5                CONDITIONS PRECEDENT
  • 6                TERM & TERMINATION
  • 7                DUTIES OF THE FRANCHISOR
  • 8                DUTIES OF THE MASTER FRANCHISEE
  • 9                RECRUITMENT AND MANAGEMENT OF FRANCHISEES
  • 10              AUTHORITY TO GRANT FRANCHISES
  • 11              MEETINGS
  • 12              REPORTING
  • 13              FRANCHISE FEES
  • 14              SUPPLY OF STOCK
  • 15              PRODUCT WARRANTIES
  • 16              DUTIES OF THE MASTER FRANCHISEE
  • 17              ADVERTISING, MARKETING & PROMOTION
  • 18              DEFAULT
  • 19              INSURANCE & INDEMNITY
  • 20              FINANCIAL REPORTING
  • 21              INSPECTION AND AUDIT OF FINANCIAL RECORDS
  • 22              CONFIDENTIALITY & NON-DISCLOSURE
  • 23              OPERATIONS MANUAL
  • 24              ASSIGNMENT
  • 25              TERMINATION
  • 26              EFFECT OF TERMINATION
  • 27              NON-COMPETE
  • 28              FRANCHISING CODE OF CONDUCT
  • 29              RELATIONSHIP OF PARTIES
  • 30              ENTIRE AGREEMENT
  • 31              GOVERNING LAW
  • 32              FORCE MAJEURE
  • 33              INTERPRETATION
  • 34              DISPUTE RESOLUTION
  • 35              SERVICE OF NOTICES
  • 36              WAIVER
  • 38              COST AND (STAMP) DUTY
  • 39              FURTHER ASSURANCE
  • 40              INJUNCTION & INTERLOCUTARY RELIEF
  • 41              WARRANTIES AND REPRESENTATIONS OF MASTER FRANCHISEE
  • 42              DIRECTORS GUARANTEE
  • SCHEDULE

 

ALSO INCLUDES FULL COMMENTARY

+ INFORMATION STATEMENT

 

 

 

 

 

 

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Franchising Australia

Practice and Procedure in Australia

by Author:  Eric Kalde

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Master Franchising

Master franchising is popular with service franchises.  Service franchises are those which involve the franchisee selling services rather than goods.  Service franchises are common in the home services, cleaning and courier industries.  Often there will be no retail premises involved, with the franchisee operating from home.  The use of a vehicle will be a critical element of the franchise.

A feature of service franchises is the high number of individual franchisees.  To avoid creating a large head office bureaucracy master franchising can be used to delegate the responsibility of growing, developing and monitoring the network in a territory to a master franchisee.

The definition of ‘franchisor’ in Clause 3 of the Code includes a master franchisee.  Clause 3also states that ‘subfranchisor has the same meaning as master franchisee’.

The grant of a master franchise is very similar to the grant of a franchise.  However, the terms of the master franchise and the responsibilities of the master franchisee are different from those of a franchisee.  A franchisor must provide a master franchisee with a disclosure document, a cooling off period and other arrangements applicable to franchisees under the Code.

While a master franchisee is entitled to receive a disclosure document, the Code is not clear about whether it must also provide one to franchisees.  The better practice is to do so, particularly if the master franchisee is a party to the franchise agreement.

3.1  Structure of Master Franchise

The master franchise arrangement can be structured in such a way that the master franchisee can be a prime contracting party, an agent of the franchisor, or a joint contracting party.  The franchisor will normally wish to protect the business format, systems and image that the franchisor has developed, but otherwise the nature of the master franchising arrangement can be structured to suit the needs of the particular network.

When creating master franchise arrangements consider the prohibition of Pyramid selling schemes in Division 3 of the Australian Consumer Law.  This prohibition may well render some methods of master franchising illegal.

3.2  Content of master franchise agreements

The Code imposes the same obligations upon a franchisor concerning the content of a master franchise agreement as apply to the content of a franchise agreement. A ‘franchisee’ is defined in clause 3 of the Code to include ‘a subfranchisor in its relationship with a franchisor’.

Disclaimer

This is not legal advice, general information only.

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