Franchise terms

The most frequently used terms

• Franchise business model: This is a business model in which the franchisee (entrepreneur, start-up, investor) buys the right to use the brand together with the overall system operation, management and control of the business as well as receive training methodology support and know-how from the franchisor (company with an established and successful business long). The franchisee operates its own business and generate profits for themselves, following the rules of the franchisor.
• Franchisor: successful company that offers franchise license for the reproduction of its winning business concept.
• Franchisee: Private company or individual who has purchased a franchise license from a profitable company to use its brand, know-how and all the blessings of built working and proven business model.
• Franchising: Method of supply of goods and services by individuals or companies that make an exact copy of a proven business formula.
• Franchise contract: A contract between franchisor and franchisee regulating their business relationships and commitments.
• Franchise Package: All rights, which are designed to provide the owner of the franchise license, including trademark, know-how, management and control of the business area and training.
• Franchise fee: The amount that the franchisee must pay the franchisor to possess franchise license.
• Intellectual Property Rights: Secret of the franchisor of doing business, trademark, manuals, etc., which should be protected by law before being sold franchise license.
• Payment National Marketing: The amount that the franchisee must pay the franchisor, after buying the franchise license for the maintenance of the marketing budget of the entire chain.
• Exclusive territory: Guaranteed area for the operation of each franchise unit that determines the franchisor provides the franchisee.
• Operational Manual: A detailed document that describes every aspect of this business model franchisor's instructions, rules, good and bad practices and all operating procedures that are necessary to achieve an exact copy of the winning business.
• Master franchise: franchises which provide exclusive franchise rights to a large landmass or an entire country.
• Job franchise: This term is used to describe a franchise model in which the owner of a franchise license is practically self-employed and in most cases it comes to providing services such as maintenance, delivery, etc.
• JV (Joint venture) franchise: A situation where the franchisor also invested with the franchisee.
• Single franchise (Single unit): franchise where the franchisee has the rights and operates only one franchise unit.
• Regional franchise (Area development franchise): Franchise, which includes the right for expansion in a region by sub-franchisees or multiple sites managed by the franchisee.
• Sub-franchise (Sub-franchise): Franchise that is provided by the master franchisee or regional franchisee, established business model in that particular area.

Buy a franchise - proved the least risky way to start a business. Read more