Advertising Fee – Advertising Fee is the annual fee that is paid by the franchisee to the franchisor as his share of the corporate advertising expenditures. This advertising fee is charged by few franchisors only.
Advertising Fund – Another continuing periodic payment to the franchisor that, like the royalty payment, can be a fixed amount or a percentage of gross sales.
Agent – An agent is an individual appointed who can act on behalf of the person or entity.The corporation is legally bound by the actions of the agent.
Agreement – Agreement definition, Agreement is the ‘contract’ that signifies a franchise.
Arbitration – Arbitration is a way of resolving disputes by referring it to a third party which is selected by the parties.
Area Developer – A person or group who owns rights to a specific region to develop franchises. In most cases area developers may own unit franchises within their territory as well as assist the franchise in selling and supporting additional franchises for a share in the franchise fee and ongoing royalties.
Area Development Rights – The rights alloted to a franchisee to operate a number of franchises within a specified geographic area.
Assignment Fees – The monthly fees paid by the franchisee to the franchise company for expenses incurred by the company like corporate marketing and advertising.
Broker – A broker is a intermediary between the buyer and the seller. He can represent either the buyer or the seller, and in some cases even both the parties.
Business Format Franchise – In Business Format Franchise the franchisor gives the permission to the franchisee for use of product, service and trademark. The entire business format is also taught to the franchisee including marketing, selling, inventory, accounting.
Business Plan – A plan that provides the objectives of a business and the steps necessary to achieve those objectives.
Buy Sell Agreement – A buy sell agreement states the legal provisions under which a business can be sold.
Capital Required – The amount of cash one is required to have available.
Company Owned Outlet – Company-owned stores or offices that in appearance are identical to the franchised outlets are also established by certain franchisors.
Conversion Franchise – A franchise system permitting existing businesses to join a national franchise system to be able to use its name, trademark and operating system.
Copyright – The exclusive right of reproduction and sale of any literary or artistic work.Copyright is granted by law for a specific number of years.
Default – The failure to perform as was agreed upon by the parties.
Designated Supplier – The suppliers approved by the franchisor in order to maintain a standard.
Disclosure – Disclosure refers to revealing facts to others. In a franchise these facts may be complimentary to the franchisor, such as disclosing a prior bankruptcy or litigation.
Disclosure Document – A registered document offering background information from over 20 different categories about the franchise. It also contains a copy of the proposed franchise agreement. The disclosure document is also referred to as the FDD (Franchise Disclosure Document), DD and the UFOC.
Distributorship – The right granted by a manufacturer or a wholesaler for distribution or sale of products. Distributorship does not generally qualify as a franchisee. However certain franchisees can qualify as a distributorship.
Earnings Claims – Assertions made by franchise companies of specific acquired sales levels or profitability levels. Also referred to as an Item 19 as it is stated in section 19 of the disclosure document.
Entrepreneur – An entrepreneur is the person who assumes the responsibility for organizing and operating the business. He also assumes the risk including the financial risk for a business venture.
Exclusive Territory – Exclusive territory gives the right of the territory to the franchisee preventing the franchisor from appointing any other franchisee for the territory or carrying on business himself in the territory.
FDD – Franchise Disclosure Document – A registered document offering background information from over 20 different categories about the franchise. It also contains a copy of the proposed franchise agreement. The disclosure document is also referred to as the FDD (Franchise Disclosure Document), DD and the UFOC.
Federal Trade Commission – FTC is the U.S. government agency that regulates franchising. It is based in Washington, D.C., and regulates a variety of trade practices.
Frachise Business Plan – A business plan is a strategic plan that lays down the company’s objectives and the specific steps that need to be taken to achieve those objectives. The Business Plan is usually prepared by company management.
Franchise – A legal franchise is defined by the following 3 factors… 1. the grant of trademark or rights, 2. a prescribed marketing plan and 3. payment of a franchise fee for the rights.
Franchise Feasibility Studies – Franchise feasibility study is conducted to determine the degree to which a company can become a successful franchisor.
Franchise Fee – The fee paid by the franchisee to the franchisor initially to acquire the franchise.
Franchise Registration – In several states specific information needs to be submitted and approved before a franchise is granted. This contains more information than the Disclosure.
Franchise Renewal – The signing of a new franchisee agreement upon the expiration of the existing one.
Franchise Venture Capital – Venture Capital is the money invested in new businesses which show chances of above average growth.
Franchisee – A person or entity to whom the right to conduct a business is granted by the franchisor or licensor.
Franchising – Franchising is a mode of doing business where two parties are involved, the franchisor and the franchisee and the contract binding them is franchise.
Franchisor – The entity or person owning the rights or license of the business. Franchisor is the person who grants the license or permission to the various franchisees.
FTC – FTC is the U.S. government agency that regulates franchising. It is based in Washington, D.C., and regulates a variety of trade practices.
Ftc Rule 436 – FTC Rule 36 was passed in 1979,to regulate the franchise industry by setting forth disclosure requirements and prohibiting franchisors from making earnings claims.
Furniture Fixtures and Equipment FFE – Furniture, Fixtures, and Equipment is the movable property used in the business.
