With many years specialising in franchising, we have regularly helped franchisors expand outside the UK or import a franchise concept by buying a master licence. We can also offer local advice to lawyers acting for overseas franchisors.
Purchasing a master licence
A ‘master licence’ usually gives you the right to operate in your own country a franchise concept from an overseas licensor.
Many franchisors will offer what appears to be a set package for a country, but much may actually be up for negotiation, such as the structure, the fees and the levels of support.
Too often lawyers, such as ourselves, are only involved when you are down to the final details of documentation. Unless you are familiar with this type of licence, there is a lot that we can do to help if we are involved earlier.
All these points affect the viability of the concept and should be tested before you get to the detail of the agreement. We are frequently consulted on these first steps and other important legal considerations, such as exit routes. It is much easier to clarify and negotiate any of these points before you are presented with a master licence agreement.
Taking a franchise abroad
Taking your UK franchise concept to another country will start in one of two ways:
- the ideal way – a properly planned international offer will be put together, the target market studied, suitable potential licensees identified, negotiations conducted and a master licence granted.
- the usual way – more usually, an overseas enquiry from a foreign franchisor will come through your website or at an exhibition. You then find yourself formulating an offer while still keeping the prospect warm before you can get to discussions and negotiations.
Either way is time-consuming. Overseas franchising sounds very glamorous, but can be frustrating. A high percentage of enquiries come to nothing, but often only after a lot of time and effort has been spent. We can guide you along the way and start you off with a method which has been proven to cut out a lot of time wasters.
Prerequisites for going overseas
You should not really consider overseas franchising without the following:
- a proven franchise system. If you have only operated through outlets owned by your own company, you will need not only a successful track record for these outlets, but also a very clear idea about how to teach other people how to do it
- a training module and a manual covering everything needed to teach an overseas person to be a franchisor and replicate your business model
- an offer. This will include a financial model that shows a profit for you, but also for your master licensee and their network
- a proper franchise structure. This will include a review of your current structure to see, for example, who owns the intellectual property that will be licensed; whether this could be held in a more protected or tax efficient manner; and whether other companies need to be formed to actually grant franchises overseas.
We have dealt with many cross-border franchise transactions between clients in the UK and parties in other countries including: Bulgaria, China, Kingdom of Saudi Arabia, Ireland, South Africa, Spain, Turkey, USA and Australia. We have relationships with many overseas franchise lawyers, but are always happy to make contact with more.
We offer you the following services:
- we can represent your client if they are granting master licences into the UK
- we also have links with many investors and franchise brokers, so we may be able to assist in appropriate introductions if your client has a concept that he wishes to bring into the UK.
We may also need to instruct a specialist franchise lawyer in your own country if one of our clients is granting a licence there.