Common Franchise Terms
COMMON FRANCHISE TERMS
- Business format franchise:
This type of franchise includes not only a product, service and trademark, but also the complete method to conduct the business itself, such as the marketing plan and operations manuals.
- Disclosure statement:
Also known as the FDD, or Franchise Disclosure Document, the disclosure document provides information about the franchisor and franchise system.
The Franchise Disclosure Document, FDD, is the format for the disclosure document which provides information about the franchisor and franchise system to the franchisee.
A license that describes the relationship between the franchisor and franchisee including use of trademarks, fees, support and control.
- Franchise agreement:
The legal, written contract between the franchisor and franchisee which tells each party what each is supposed to do.
The person or company that gets the right from the franchisor to do business under the franchisor’s trademark or trade name.
A method of business expansion characterized by a trademark license, payment of fees, and significant assistance and/or control.
The person or company that grants the franchisee the right to do business under their trademark or trade name.
- Product distribution franchisee:
A franchise where the franchisee simply sells the franchisor’s products without using the franchisor’s method of conducting business.
The regular payment made by the franchisee to the franchisor, usually based on a percentage of the franchisee’s gross sales.
The marks, brand name and logo that identify a franchisor which is licensed to the franchisee.
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