Key franchise terms
Key franchising terms explained
Business format franchise: A franchise where the franchise owner buys into a total turnkey system of brand, know-how, training, methodology and support.
Exclusive training: The area licensed out to the franchise owner in which to exclusively conduct the business.
Franchise agreement: The contract between the franchisor and franchise owner which documents the legal obligations of their business relationships.
Franchising: Method of marketing goods and services via individuals replicating a proven licensed business formula.
Franchise owner/franchisee: An individual or group who own the rights to replicate a business concept.
Franchisor: A company that offers a licence to replicate its business concept.
Franchise fee: The amount of money the franchise owner has to pay to the franchisor to own the franchise rights.
Franchise package: The total franchise system rights provided to the franchise owner, including branding, know-how, systems, territory and training.
Intellectual property rights: The franchisor's secrets of doing business and various trade marks, branding, manuals, etc. which should be legally protected before being sold in a franchise package.
Job franchise: A term used to describe a franchise where the franchise owner is a hands-on owner-operator rather than a manager, usually linked with van-based services such as maintenance.
Joint venture franchise: A situation where the franchisor also takes a financial stake in the project.
Management franchise: A term used to describe a franchise where the owner manages the operation and co-ordinates employees to do the acutal work.
Master Franchise: A franchise where the exclusive territory covers a substantial region or entire country.
Operations manual: A detailed document which describes every item of the business system and work procedures.
Regional franchise / Area Development franchise: A franchise which includes the rights to expand a region through appointed sub-franchise owners or multiple managed outlets.
Single unit franchise: A franchise where the franchise owner owns and operates one franchise location within a specific region.
Sub-franchise: A franchise which is granted by a Regional/Area Development or Master Franchise Owner, who has piloted the concept and set up support infrastructure for the territory.