• LinkedIn
Telefono: 02 36 52 29 61 | info@studio-pandolfini.it
Franchising in Italy
  • HOME
  • ABOUT US
  • THE ITALIAN ENVIRONMENT
  • SERVICES
  • RESOURCES
    • Subscribe to our newsletter
  • BLOG
  • CONTACT US
  • Search
  • Menu Menu
expanding franchise italy changes franchisors documents manual training

Expanding a franchise in Italy through Master franchising: what changes are needed in terms of franchisor’s documents, manual and training?

11 September 2020/in Franchising, News

Master Franchising is the most frequently used method to expand a franchise network in Italy. But many foreign franchisors underestimate the changes in their franchise agreements, documents, manuals and training programs that are needed to adopt this model in Italy. Such adaptation –which is necesssary to ensure success to the franchise and to avoid legal risks –  requires,time and costs. Any foreign franchisor willing to elect a master franchising strategy for its expansion in Italy should  hire local legal and business consultants, with a  significant knowledge and experience in the franchising field  to create and adapt the necessary documents, manual and programs.

Index

1.Master franchising: a very common method of expansion, but keep attention to the adaptations needed

Master Franchising is the most frequently used method to expand a franchise network in Italy; according to the 2021 survey made by Assofranchising, 60% of foreign brands currently adopt this model in Italy.

But many foreign franchisors underestimate the changes in their franchise agreements, documents, manuals and training programs that are needed to adopt this model in Italy, and the related costs.

Master franchising is premised upon a sharing of the responsibilities for recruiting, training and supporting the sub-franchisees, and upon a sharing of the revenue stream from them. Whereas most franchisors embarking upon international franchising already have development agreements or are fairly conversant with how they work, most novice international franchisors are unfamiliar with the details of what is required to successfully use master franchising as a growth strategy in the Italian market.

Let’s briefly see what adaptations and changes foreign franchisors need to adopt this method of expansion in Italy.

2.What changes to agreements and documents are needed for Master Franchising in Italy?

First of all, foreign franchisors electing to use master franchising will need to prepare both the disclosure document and a master franchise agreement compliant to Italian franchise law,  thus  modifying their domestic franchise disclosure document and agreement to reflect the required changes. Additionally, they will have to adapt their standard ,  unit sub- franchise agreement that the  master franchisee will have to sign with  the Italian sub-franchisees.

This requires, of course, time and costs. Misunderstanding the time and cost required to properly draft the documents that are needed for a Master franchise transaction in Italy can be problematic. Franchisors are tipically  in a hurry to have documents available once they have an international prospect, but they are also reluctant to incur the expenses of preparing documents until that point.

A  foreign franchisor willing to elect a master franchising strategy for its expansion in Italy will have to prepare both a specific master franchise disclosure document and a specific sub-franchise disclosure document for the master franchisee’s adaptation to the Italian market and use to sell unit franchises.

The disclosure must be drafted in Italian language, according to the Italian franchise law. The master franchise agreement and, above all, the standard sub-franchise agreement need not to be in Italian by Law: however, it is common practice in Italy that also such agreements are drafted in Italian language.

This adaptations should be done by an Italian law firm, with a significant knowledge and expertise in the franchising field. International franchisors will need to invest significant time in making the decisions required to prepare these documents, since they have different requirements from domestic unit franchise agreements.

Since the master franchisee usually fulfills most duties to franchisees that are specified in sub-franchise agreements that the franchisor would fulfill in a direct, domestic agreement, a thorough review and revision of the franchisor’s domestic franchise documents will be required to prepare the documents fit for Italy.

An important issue in structuring a master franchise agreement is the nature and content of the unit sub-franchise agreements to be granted by the master franchisee. When the franchisor uses the Master Franchise scheme, he generally provides the Master Franchisee with a draft standard sub-franchise contract to which he must comply, except for exceptions dictated by the peculiarity of the Italian market and by local legislation.

The franchisor will want to have continuity and the comfort that comes from requiring the use by the master franchisee of the form of unit agreement used in the franchisor’s home jurisdiction. On the other hand, the master franchisee will want to have some flexibility to adapt the standard agreement for Italian customs, circumstances, and law. The master franchisee may also wish to have some flexibility to vary the standard agreement for special deals and situations.

Ultimately, there has to be a workable balance between the needs of the franchisor and the master franchisee.

3.What changes to operating manuals are needed for Master Franchising in Italy?

Just as all franchisors have developed operations manuals to explain to franchisees and their staffs the procedures for opening and operating a franchised business, franchisors that adopt master franchising as their expansion strategy in Italy should prepare master franchise manuals that explain how master franchisees are to fulfill their duties as master franchisees. This approach is used to create flexibility and confidentiality in operating procedures.

Although franchisors have typically operated multiple outlets before they begin franchising, and can prepare their franchise operations manuals based upon how they have learned to successfully operate their businesses, many franchisors grant their first Italian master franchise agreement having no experience with international master franchising. Thus, they will need to either hire or retain someone locally with the appropriate experience to create the master franchise manual. This is a cost of master franchising that is often overlooked.

The unit franchisees’ operations manuals used by franchisors in their home markets typically require modifications to address different ways of doing business in Italy and to clarify the role of the franchisor and of the master franchisee in supporting the sub-franchisees.

These manuals usually must be translated into Italian, which can be a considerable additional expense. Although master franchise agreements often require master franchisees to adapt manuals to the Italian market and to bear responsibility for translating them, franchisors need at least to approve the adaptations and to check if the translation is true to the franchisor’s intentions.

4.What training programs’ changes are needed when expanding in Italy using Master Franchising?

Training is a core element of every franchising program. Master Franchisees expect to be trained in how to operate the franchised business, or in how to adapt their pre-existing operating procedures to the franchise brand’s policies and procedures.

Most franchisors train the master franchisee in the skills needed to be a franchisor, using a formal classroom training at the franchisor’s headquarters, as well as on-the-job assistance in the master franchisee’s territory. This is an added expense for the franchisor, but it should result in the master franchisee successfully recruiting and establishing sub-franchisees.

When an Italian master franchise is granted, the initial training program and materials usually need to be modified to reflect how business is done in Italy. Much of training related to operating a franchised outlet will be assumed by the master franchisee; the franchisor will want to make sure that the essence of its program is retained by the master franchisee.

An entirely new training program must usually be established to teach a master franchisee how to act as a franchisor in the Italian territory. Franchisors should consider expenses related to creating training materials and manuals, the duration and location of the classroom component of the training, how many of the master franchisee’s team should attend the training, the nature of follow up training in the master franchisee’s territory, and on going training to help master franchisees improve their businesses.

 

Avv. Valerio Pandolfini

For other in-depth articles on issues relating to franchising: visit our blog.


The information contained in this article is of a general nature and is not to be considered an exhaustive examination of the various issues, nor is it intended to express an opinion or provide legal advice. Specific legal advice must be provided with regard to individual cases.

Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share by Mail
https://franchisinginitaly.com/wp-content/uploads/2020/09/expanding-franchise-italy-changes-franchisors-documents-manual-training.jpg 800 1200 Valerio Pandolfini https://franchisinginitaly.com/wp-content/uploads/2020/12/franchisinginitaly-pandolfini-logo.png Valerio Pandolfini2020-09-11 09:52:152021-12-02 14:53:08Expanding a franchise in Italy through Master franchising: what changes are needed in terms of franchisor’s documents, manual and training?

About the author

Avv. Valerio Pandolfini
CONTACT US

Latest posts

  • expanding franchise italy main features pros and cons why whenExpanding a franchise in Italy through Master franchising: a brief guide17 February 2023 - 09:09
  • franchising preliminary agreements letters of intent loiFranchising and preliminary agreements in Italy: the letters of intent (LOI) and option agreements30 November 2022 - 09:59
  • misleading advertising italy what are sanctions for franchisorsFranchising in Italy: the regulation of Mmisleading and comparative advertising: the sanctions for franchisors29 November 2022 - 10:05
  • duration franchise agreements in italyFranchise agreements in Italy: duration, renewal, withdrawal, termination29 November 2022 - 09:43
  • disclosure potential franchisees what provided italian law franchisingDisclosure to potential franchisees: what it is provided for by Italian Franchise Law29 November 2022 - 09:16

Search

Subscribe to our Newsletter

For further information and to schedule a first telephone interview or a non-binding fact-finding meeting, you can fill in the form to be contacted:

By phone:

+39 02 36 52 29 61

By mail:

info@studio-pandolfini.it

Or, filling out

the following form:

I authorize the data controller to use my personal data for sending communications relating to this contact request in accordance with the provisions of the privacy policy Privacy Policy

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

This contact form is deactivated because you refused to accept Google reCaptcha service which is necessary to validate any messages sent by the form.
Studio Legale Avvocato Pandolfini | VAT nr. 04848740967 | C.F. PNDVLR64M04D612F | Polizza Generali INA-Assitalia n. 764104068 | Polizza Elite Insurance n. 2015/R/130223
Mail: info@studio-pandolfini.it | Telefono: 02 36 52 29 61 | Privacy Policy | Cookie Policy | Manage Consent | Realizzazione sito web: Alkimedia Web Agency Milano, Realizzazione siti web Milano
Expanding a franchise in Italy through Master franchising: the economicsexpanding franchise master franchisingexpanding franchise italy master franchising problemsExpanding a franchise in Italy through Master franchising: how to face (and...
Scroll to top
We and selected third parties use cookies or similar technologies for technical purposes and, with your consent, for other purposes as specified in the Cookie Policy. You can freely give, deny, or withdraw your consent at any time by clicking "Manage Consent" at the bottom of the page. You can consent to the use of such technologies by using the “Accept All” button or deny and close the notice by using the "Reject All" button. Settings

Reject All Accept All
Manage Consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
_GRECAPTCHA5 months 27 daysThis cookie is set by the Google recaptcha service to identify bots to protect the website against malicious spam attacks.
cookielawinfo-checkbox-advertisement1 yearSet by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
CookieLawInfoConsent1 yearRecords the default button state of the corresponding category & the status of CCPA. It works only in coordination with the primary cookie.
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga2 yearsThe _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gat_UA-154928096-61 minuteA variation of the _gat cookie set by Google Analytics and Google Tag Manager to allow website owners to track visitor behaviour and measure site performance. The pattern element in the name contains the unique identity number of the account or website it relates to.
_gid1 dayInstalled by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
Save & Accept