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Extra Income Articles
Franchising Agreements and the Grant of Right to Sell
Franchises
By Lance Winslow
When a franchisee company offers for sale of their method
of doing business to the public and use of their brand-name
they must list the information in a concise format in the
franchise agreement. Additionally when a franchisor wishes
to expand their franchise system through the use of master
franchises, they will need to further describe how the
master franchise is expected to go about the selling of
additional franchises and give an overview of exactly what
is expected in the agreements.
Below you will find an excerpt from my company's franchise
agreement that dealt with the grant of right to sell franchises
under my brand-name. This may give you some good ideas
of how such things are done;
1.1.1 Grant of Right to Sell Franchises
Once Franchisee Core Services operating franchise has
been established and operating for a period of ninety (90)
calendar days, Franchisor grants to Franchisee the right
to sell to other parties franchises of The Car Wash Guys
or Wash Guys Systems (the right to become a “Master
Franchise”) within the boundaries of Franchisee designated
Marketing Area only. If Franchisee has not established
and have operational the Core Services franchise within
one hundred eighty (180) calendar days of delivery of Franchisee’s
initial car wash truck/unit, this right may be terminated
by Franchisor.
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Of course if you are a franchisor and are considering
master franchises as a method of expanding your business
model you should also realize that it is not as easy as
it looks. In fact it is quite a litigious industry and
therefore you'll need to seek legal counsel and find your
self a competent, knowledgeable and an experienced franchise
attorney who is capable of drawing up these master franchise
agreements. Consider us in 2006.
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