Glossary of Franchising Terms
Select the term to see its definition.
Brick and Mortar
An retail industry term referring to an outlet for distributing products and/or services, namely a physical structure such as a building.
An retail industry term referring to an outlet for distributing products and/or services, namely a physical structure such as a building.
Broker
A person who acts as an intermediary between the Franchisor and prospect Franchisee to assist in the sale of the franchise opportunity. A broker receives a commission from the Franchisor upon the signing of the Franchise Agreement.
A person who acts as an intermediary between the Franchisor and prospect Franchisee to assist in the sale of the franchise opportunity. A broker receives a commission from the Franchisor upon the signing of the Franchise Agreement.
Chartered Banks
The Canadian banking institutions that are regulated by the Bank Act and who must meet strict regulatory requirements.
The Canadian banking institutions that are regulated by the Bank Act and who must meet strict regulatory requirements.
Corporate Identity
The visual and physical characteristics, features, and qualities of a business that makes it unique, distinguished, and well-positioned in the marketplace. A business' corporate identity can include its logos, slogans, symbols, advertising methods, among other corporate identifiers.
The visual and physical characteristics, features, and qualities of a business that makes it unique, distinguished, and well-positioned in the marketplace. A business' corporate identity can include its logos, slogans, symbols, advertising methods, among other corporate identifiers.
Dealer Discount
A product discount given to an individual or business (such as a wholesaler) who resells the product for profit.
A product discount given to an individual or business (such as a wholesaler) who resells the product for profit.
Default
The failure of either Franchisee or Franchisor to fulfill the terms of the Franchise Agreement
The failure of either Franchisee or Franchisor to fulfill the terms of the Franchise Agreement
Due Diligence
In business, the process of fact-checking, analyzing and investigating a business opportunity to ensure its accountability, credability and accuracy.
In business, the process of fact-checking, analyzing and investigating a business opportunity to ensure its accountability, credability and accuracy.
Earnings Claims
Claims made by the franchisor as to the past financial performance of franchisees or to the potential financial performance of a franchisee. If given, they must be disclosed in section 19 of the UFOC.
Claims made by the franchisor as to the past financial performance of franchisees or to the potential financial performance of a franchisee. If given, they must be disclosed in section 19 of the UFOC.
Federal Trade Commission
The U.S. government agency that regulates franchising. Located in Washington, D.C.
The U.S. government agency that regulates franchising. Located in Washington, D.C.
Franchise Agreement
The legally binding contract which outlines the Franchisor's terms and conditions when granting the franchise to the franchisee. It also contains the Franchisor's obligations, the Franchisee's obligations, territorial rights, fees, location requirements, effects of termination, etc.
The legally binding contract which outlines the Franchisor's terms and conditions when granting the franchise to the franchisee. It also contains the Franchisor's obligations, the Franchisee's obligations, territorial rights, fees, location requirements, effects of termination, etc.
Franchise Fee
A one-time fee paid by the franchisee to the franchisor to "buy into" the franchise. Generally, the fee is applied to the costs of initial training and support for new franchisees.
A one-time fee paid by the franchisee to the franchisor to "buy into" the franchise. Generally, the fee is applied to the costs of initial training and support for new franchisees.
Franchise Registry
The Franchise Registry is a national online listing of franchise systems whose franchisees receive expedited loan processing when applying for financial assistance from the U.S. Small Business Administration (SBA).
The Franchise Registry is a national online listing of franchise systems whose franchisees receive expedited loan processing when applying for financial assistance from the U.S. Small Business Administration (SBA).
Franchise System
The unique characteristics, qualities, components, and brand strength of company that allows it to produce a proven and profitable business operation that can be duplicated and re-sold for expansion purposes.
The unique characteristics, qualities, components, and brand strength of company that allows it to produce a proven and profitable business operation that can be duplicated and re-sold for expansion purposes.
Franchisee
The individual or group who purchases the right to operate a proven concept or business system for profit.
The individual or group who purchases the right to operate a proven concept or business system for profit.
Franchisor
The company or entity that creates a business model or system and grants the right to a purchaser to operate it.
The company or entity that creates a business model or system and grants the right to a purchaser to operate it.
Gross Sales
The total of all retail or ticketed prices of a business which includes applicables taxes, and before any discounts, redemptions, or rebates are applied.
The total of all retail or ticketed prices of a business which includes applicables taxes, and before any discounts, redemptions, or rebates are applied.
International Franchise Association (IFA)
The International Franchise Association was founded in 1960 and is a membership organization of franchisors, franchisees and suppliers to protect, enhance, and promote franchising worldwide.
The International Franchise Association was founded in 1960 and is a membership organization of franchisors, franchisees and suppliers to protect, enhance, and promote franchising worldwide.
LISTSERV
A LISTSERV is a mailing list of people's names and addresses that is used to send certain messages or announcements to many people at once.
A LISTSERV is a mailing list of people's names and addresses that is used to send certain messages or announcements to many people at once.
Net Sales
The total of all retail or ticketed prices of a product or service after any discounts, redemptions, or rebates are applied. Taxes are applied to this "net" amount.
The total of all retail or ticketed prices of a product or service after any discounts, redemptions, or rebates are applied. Taxes are applied to this "net" amount.
Operations Manual
The corporate guidebook and instruction toolkit produced by the franchisor and given to the franchise to explain and teach the methods, strategies, functions, techniques, secrets, and all other operational procedures of the franchise system.
The corporate guidebook and instruction toolkit produced by the franchisor and given to the franchise to explain and teach the methods, strategies, functions, techniques, secrets, and all other operational procedures of the franchise system.
Personal Guarantee
A promise or commitment in writing made by a business owner to personally repay any of the corporate liabilities in case of default.
A promise or commitment in writing made by a business owner to personally repay any of the corporate liabilities in case of default.
Return on Investment (ROI)
The measurement of profits made based on the initial investment. Typically determined as a percentage, proper determination of ROI requires a mathematical formula.
The measurement of profits made based on the initial investment. Typically determined as a percentage, proper determination of ROI requires a mathematical formula.
Working Capital
In business, working capital refers to the day-to-day operational cash available and measured by: current assets less current liabilities. From an investor's standpoint, working capital are the funds set aside to sustain one's day-to-day existence until the business venture begins producing profit.
In business, working capital refers to the day-to-day operational cash available and measured by: current assets less current liabilities. From an investor's standpoint, working capital are the funds set aside to sustain one's day-to-day existence until the business venture begins producing profit.