Master Franchising: Expand Your Business Like A King Size!
Posted by franchiselawus on May 10th, 2017
Number of factors pushes the global brands to enter into the Indian master franchising arrangements. These factors are like local sales, marketing know-how of the master franchisee, less investment, known market region to the franchisee, sharing of expenses, government approvals, easy availability of local employees and many other things. The major factor for the growing master franchising in India is the regulatory restrictions on retail trading by the foreign companies.
What actually does master franchising mean?
Master franchising is basically a kind of a relationship between the franchisor and franchisee where the master franchisee gets the right to appoint sub-franchisees within a specific region. In return, the master franchisee gets a large amount of fee and ongoing royalties, which may vary.
Master Franchising Agreements:
Now because of the nature of the business and contemplation involved, the Master Franchise Agreements are generally intricate documents. A usual master franchise arrangement lets the master franchisee to expand the business in the region under the franchisor's brand name and trademark with or without his permission to produce the products locally, gives the guidelines for the operation of business and clearly states the returns for the franchisor.
It is important here to note that Master franchising is not for amateurs. It requires the considerable amount of capital, not merely for getting the master franchise license, but also for launching a brand into a new country or territory. However, for the flourishing master franchisee, the rewards are bigger than for multi-unit franchisees, area developers, and area ruling bodies.
The Indian master franchisee should review the agreement from the viewpoint of a proficient tax structuring. In view of the vast definition of the term "franchise" for purposes of service tax, the fee owed under a typical Master Franchise Agreement would also magnetize service tax. Further, if the agreement stipulates for transfer of technical expertise to the franchisee, or any other kind of unique service required for any reason including designs, drawings, publications and terms of technical personnel, the parallel payment may be issued to research and development cess.
In certain arrangements, it may consequently be sensible and hence advised to individually state the trademark license fee and royalty, fee for technical knowledge, franchise fee etc. Separate agreements may mirror a less complicated image of payment structure thus avoiding tax disputes. Though, in view of complexity of the issues caught up and the possible financial and legal revelation, due care and vigilance should be exercised by the franchisee while formalizing Master Franchise Agreements and support from professionals having a good professional experience of licensing agreements is advisable. To know more about the Indian Master Franchisee or to have a better understanding of how you can get your own master franchisee consult Mario L. Herman.To know about the hotel franchise attorney simply visit www.franchise-law.comTop Searches - Trending Searches - New Articles - Top Articles - Trending Articles - Featured Articles - Top Members
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