Considering investing in a master licence?

Fiona Boswell, head of franchising at Fraser Brown Solicitors, gives her top five tips for becoming a master franchisee for an incoming brand

Becoming the UK master licence holder for an incoming brand is the natural next step for any multi-unit franchisee with experience in the sector.

There are, however, a number of issues to consider if this is the route that you are planning to take. Here are the top legal and practical tips for franchisees considering taking on a master licence.

1. Verify the credibility of the brand

Successful franchisors in other jurisdictions must be sure that their concepts work in the UK. For example, is the brand registered as a trademark in the UK and does it have a common sense meaning in this country? Are you going to have to register the brand? If so, do you know the scope and specification?

2. Ensure you have the right systems and support

What will the franchisor provide in terms of support for establishing the brand in the UK? How much training will you need, and where? Usually, there is a good chance this will involve overseas travel – who is expected to pick up the cost for this?

3. How realistic is the development plan?

How many stores must you open and in what timescale? How realistic is this? How easy is it to find suitable sites? Overseas brands can impose unrealistic timescales for development that do not take into consideration the UK property market and business climate.

4. Get advice on the contract

Franchisors will often require the master franchisee to sign up to the contracts they use for all their territories, which may be totally unsuitable for the UK. To ensure that you are not agreeing to overly onerous obligations, it’s important you seek expert advice.

5. Draw up your own contract for use with your franchisees

The master franchise agreement will often be unsuitable for this country, containing unlawful or unethical provisions that put off franchisees from taking on the brand. Get advice from a specialist franchise solicitor accredited with the British Franchise Association to discuss the preparation of suitable contracts.

Word to the wise

Don’t treat a master licence as just another franchise contract – master licence contracts are designed for a longer timeframe and come with considerable expenses that you cannot easily get out of early. Understanding what you are agreeing to is even more vital, and as brands are keen to enter a new market you may have more leverage to negotiate changes than usual.

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