BASIC FRANCHISING TERMINOLOGIES Flashcards
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.
Business Format Franchise
the disclosure document provides information about the franchisor and franchise system (Also known as FDD).
Disclosure statement
A license that describes the relationship between the franchisor and franchisee including use of trademarks, fees, support and control.
franchise
The legal, written contract between the franchisor and franchisee which tells each party what each is supposed to do.
Franchise Agreement
The person or company that gets the right from the franchisor to do business under the franchisor’s trade mark or trade name
Franchisee
A method of business expansion characterized by a trademark license, payment of fees, and significant assistance of control
Franchising
The person or company that frants the franchisee the right to do business under their trademark or trade name
Franchisor
a franchise where the franchisee simply sells the franchisor’s product without using the franchisor’s method of conducting business
Product Distribution Franchisee
the regular payment made by the franchisee to the franchisor, usually based on a percentage of the franchisee’s gross sales.
Royalty
the marks, brand name and logo that identify a franchisor which is licensed to the franchisee.
Trademark
distributor has a contractual relationship with the supplier, buys from the supplier in bulk and sells in smaller quantities, is familiar with local markets and customers, may do business with many companies more that just the supplier/producer, may not receive contractual support and training from the supplier/producer like a franchise.
Distributorship
allows licensee to pay for the rights to use a particular trademark. Unlike franchises, in which the franchisor exerts significant control over the franchisee’s operations, licensors are mainly interested in collecting royalties and supervising the use of license rather than influencing the operations of the business.
Licensing
is to provide prospective franchisees with information about the franchisor, the franchise system and the agreements they will need to sign so that they can make an informed decision.
FDD
