What is a master licence?

A master licence agreement is, in essence, an agreement where a franchisor appoints another business to act as the franchisor and to grant sub-franchises. This agreement is used predominantly in international franchising, so that a UK franchisor wishing to expand overseas and not wanting to do so itself appoints a master franchisee in the foreign countries.  The master franchisee is trained up to enable it to provide the franchisor’s obligations in the franchise agreement, in return for which the franchisor receives a percentage of the initial and continuing fees.  Sometimes master licences are used in the franchisor’s own country, so that a country is divided up into various master territories. However, in the UK this is unusual and generally does not work because, unlike the US and Australia, where such regional masters are common, the UK is really too small for this type of arrangement to work.