Master Franchise Agreement - Ins
Outs of the Franchising Business
Every business has its own pros
and cons and franchising businesses are no exception. Before using this
trading option, you need to be fully aware of the ins and outs of this
business. In considering a franchise business, everything is mentioned
in a legal document called the master franchise document. This is a
formal document signed between the franchising firm and the
entrepreneur who is purchasing the license. Before entering in to a new
contract, it is advisable that both parties should consult a franchise
agreement template so that there are no issues later. It is
obvious that franchising has more positive factors than negative ones.
Let’s look at some of them.
The Brand Has a
This is the biggest difference
between buying a franchise and starting a business from scratch.
If you are buying a license from a well-reputed company, you
don’t have to invest any efforts to attract customers because
most people are aware of the name. This point also has its
negative effect. Most brands state very strict conditions in the
franchise agreement because they don’t want to lose their
reputation or face a reduction in customer count. Therefore, the
franchisee should ensure that he maintains the reputation of the
The Franchisee Has to
Most people interested in
franchises do not have previous business experience. Hence, they
face many problems when they try to implement business operations. A
franchisor does not put its market progress at stake under any
condition. Some firms allow a very small testing period to franchisees.
These entrepreneurs have to prove their worth in this limited time
period. This entire scenario can be termed as one of the disadvantages
of the franchising business.
The master franchise agreement can be termed as the main source of
interaction between the franchising company and the franchisee. Once
this agreement is signed by both parties, the agreed upon points cannot
be modified in any manner.
Franchising companies have predefined standards for quality control.
Therefore, these companies expect the franchisees to maintain the same
standards. Most of them are inexperienced and they find it
hard to produce the same results initially.
If you are purchasing a franchise from a company, you should analyze
the time period available to you to produce the required level of
performance. This time period should be stated in the master
If you have purchased a franchise
from a prolific company, you don’t have to plan an advertising
campaign because the customers are already aware of the product
performance and the caliber of the franchising firm. This
condition is mentioned in the master franchise agreement.
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