This document is a master franchise agreement, to be used where a franchisor enters into an agreement with a master franchisee. In this precedent, the master franchisee will not operate its own franchised business.
Types of master franchise arrangements
There are many different types of master franchise arrangements. Some master franchisees take on virtually all responsibilities of the franchisor in the territory. In other cases, the master franchisee performs more of an administrative or supervisory role on behalf of the franchisor. Some master franchises are area representative agreements, where the master franchisee is essentially an incentivised franchise salesperson. Others are area development agreements, where the master franchisee is expected to open and operate franchises.
This precedent is intended to highlight some of the issues which may need to be considered when drafting a master franchise agreement.
Operation of a franchise by master franchisee
This precedent assumes that the master franchisee does not also operate a franchise personally (or any franchise is operated under a separate franchise agreement.)
However, it is not uncommon for the master franchisee to also operate franchises, in which case issues such as cross-default and termination need to be considered.
For franchisors seeking to enter into an individual franchise agreement, or franchisors wishing to find a franchise agreement to attach to this precedent, see the separate precedent “Franchise agreement”.
This document has been reviewed and updated by Stephen Giles, Partner, Norton Rose Fulbright. This precedent is based on precedents authored for LexisNexis by Mark Carkeet, Partner, Minter Ellison; Kelly Mitchell, Senior Associate, Minter Ellison and Michael Redfern, Consultant, Russell Kennedy.
This document is prepared with the assistance of Specialist Editor Murray Landis, Partner, K&L Gates.