- Advertising levy
The advertising levy covers the franchise system’s advertising and promotional activities. - Franchise Agreement
The franchise agreement is a legal written document that governs the relationship between the franchisor and franchisee. It specifies the terms of the franchise contract such as rights and responsibilities of the parties, fees and payments, territory and duration of agreement. - Approved Site
The approved site is the location that the franchisor chooses, for the franchisee’s set-up, which meets the criteria of the franchise unit. - Area Franchisee
An area franchisee purchases the right to open and operate a specified number of franchise locations, in a defined geographical area, during a defined period. - Business Format Franchise
A business format franchise is where the franchisor grants a franchisee a licence to use the franchisors product, service, operating system and trademark. - Business Plan
A business plan is a document prepared by a franchisee, which summarizes its operational and financial goals and objectives for the franchise, and contains detailed plans and budgets showing how these objectives are to be achieved. - Collateral
Collateral is a form of security that the borrower may offer the lender to guarantee a loan or other credit. Collateral can be resources, belongings, or something of wealth and value to the borrower. - Copyright
Copyright is the exclusive right of a person to use, and to license others to use, works of art, music, or literature, and to protect these works from the unauthorized use. This statutory right prevents others from copying or exploiting a person’s work without permission. - Disclosure Document
The franchise industry recognized that for prospective franchises to make an informed decision, they need comprehensive information provided in a standardized format. This led to the introduction of the disclosure document. This document is intended to provide prospective franchisees with comprehensive information about all aspects of the franchise offer. - Earnings Claims
Earning claims are the actual or forecasted franchise sales, profits, or earnings stated by the franchisors. - Equity
Equity is the total value or worth of an asset. It is an individual’s or company’s shares and ownership rights of an asset, and does not represent an obligation to pay in the future. - Exclusive Territory
The identified and specific area of operation outlined to a franchisee that sometimes gives the sole right to operate within that territory. - Franchise
A franchise is an agreement in which a firm (franchisor) enters into a contract with other businesses (franchisees), granting them the authorization to operate in the distribution of goods and services, under the franchisor’s trade name and guidance, in exchange for a fee. - Franchise Consultant
A franchise consultant is a business guide with expertise in the franchising industry. They give advice on topics such as franchising operations, companies, and relationships. - Franchise System
A franchise system refers to the different franchises operating in a particular country. - Franchise Unit
A franchise unit refers to each individual outlet, whether company owned or franchised. - Franchisor
A franchisor is an individual, partnership, or corporation who grants an investor (the franchisee), the right to conduct business under their trade name, using their operational methods and organizational systems. - Franchisee
A franchisee is an individual, partnership, or corporation who purchases the right from the franchisor to conduct business under their trade name. - Initial Investment
The total investment is the capital required to start the franchised business. - Initial Franchise Fee
The initial fee is a once off lump sum, paid by the franchisee to the franchisor, upon signing the franchise agreement. - Licensing
Licensing is the legal act of one party granting rights to another party to a legally protected property in exchange for a fee or royalty. - Master Franchisee
A Master franchisee is the individual who negotiates the franchise rights for a defined territory (usually a country), and assumes the rights and obligations of the franchisor in that particular territory. - Marketing
Marketing is the process or technique of planning, pricing, promoting, selling and distributing products and services to create exchanges that satisfy both the customer and the organization. - Multi-unit franchisee
A multi-unit franchisee is one that owns and operates more than one unit of the franchise, but does not have the rights to a defined territory. - Operations Manual
The manual contains instructions advising a franchisee how to operate the franchise. - Renewal
The continuation of the term of the franchise agreement once it has expired. The franchise agreement should specify the terms and conditions of the renewal. - Royalty Fee
Also referred to as the “management service fee”, these fees are the continuous payments the franchisee gives the franchisor to stay part of the franchise system. - Supplier
A supplier is the authorized individual or company who has been approved by the franchisor, to supply products or services to the franchisee. - Territory
Territory is defined as a specific area in which the franchisee has the exclusive right to conduct business, without the threat of competition from fellow franchisees. - Trademark
A franchise trademark is a form of identification such as a brand name or logo, which is associated with the franchise. - Turnkey
Where everything is provided for and literally where the owner simply has to “turn the key” to start operating.
