Common Franchise Words and Definitions
Maybe you’re thinking of becoming a small business owner via purchasing a franchise. Or perhaps you just want to be in the know on franchise lingo. Either way, today’s post will help you make sense of the sometimes confusing jargon of the franchise world. This week we’ll present a primer on some franchise words and their definitions to help you understand how franchises work.
- Disclosure statement It was once known as the UFOC, or Uniform Franchise Offering Circular; but was recently renamed to the FDD, Franchise Disclosure Document, which provides information about the franchisor and franchise system.
- Franchise agreement This refers to the legal written contract between the franchisor and franchisee which describes each party’s rights, responsibilities, and obligations.
- Royalty The regular payment made by the franchisee to the franchisor, usually based on a percentage of the franchisee’s gross sales.
- Trademark The franchisor’s identifying marks, brand name and logo that are licensed to the franchisee.
- FDD The FDD, Franchise Disclosure Document, is a document all potential franchise owners should receive and review before selecting a franchise. This document provides all information about the franchisor, franchisee contact information and franchise system to the prospective franchisee.
Next time we’ll be looking at alternatives to franchising and the differences between them. If you are thinking about a franchise opportunity, talk to your local FranNet consultant and receive your free Personal Franchise Assessment to get matched to the right franchise for your business personality.