- Advertising Fund:
- A fund established by the franchisor to pay for advertising and promotional activities on behalf of all the franchisees in the system.
- Area Development Agreement:
- A type of franchise agreement where the franchisee is granted the right to develop a specific geographic area and open multiple units within that area.
- Area Representative Agreement:
- A type of franchise agreement where the franchisee is granted the right to open multiple units within a specific geographic area, but does not necessarily have to develop the entire area.
- Continuous Quality Control:
- A system of monitoring and improving the quality of products and services provided by franchisees.
- Co-Branding:
- A type of franchise agreement where two or more existing brands combine to create a new brand.
- Disclosure Document:
- A document that provides detailed information about the franchisor and the franchise opportunity, as required by federal and state franchise laws.
- Encroachment:
- When a franchisor opens a new unit in the same area as an existing franchisee, it is called encroachment.
- Exclusive Territory:
- A geographic area where the franchisee has the exclusive right to operate the franchise.
- Franchise:
- A business arrangement in which an individual or company (the "franchisee") is granted the right to use the name, trademark, and operating systems of a larger company (the "franchisor") in exchange for a fee.
- Franchise Agreement:
- A legal contract between a franchisor and a franchisee that outlines the terms and conditions of the franchise relationship.
- Franchise Fee:
- A one-time payment made by the franchisee to the franchisor in exchange for the right to use the franchisor's name, trademark, and operating systems.
- Good Faith:
- Acting honestly and without deceit or intent to defraud.
- Indemnification:
- The act of compensating for loss or damage.
- Initial investment:
- The total amount of money that a franchisee is required to pay to the franchisor in order to start the franchise.
- Management Services Agreement:
- A type of franchise agreement where the franchisor provides management services to the franchisee.
- Master Franchise:
- A type of franchise agreement where the franchisee is granted the right to sub-license the franchise in a specific geographic area.
- Multi-Unit Development Agreement:
- A type of franchise agreement where the franchisee is granted the right to open multiple units within a specific geographic area.
- Non-Compete Clause:
- A clause in the franchise agreement that prohibits the franchisee from operating a similar business for a certain period of time after the end of the franchise agreement.
- Non-Disclosure Agreement:
- A legal agreement between the franchisor and the potential franchisee in which the potential franchisee agrees not to disclose any confidential information provided by the franchisor.
- Ongoing expenses:
- Ongoing costs associated with operating a franchise, including royalties, marketing fees, and other expenses.
- Option:
- An agreement that gives the franchisee the right to renew the franchise agreement after the initial term has expired.
- Public Offering Condition:
- A clause in the franchise agreement that requires the franchisor to register the franchise offering with the relevant regulatory authorities.
- Proprietary systems:
- Unique processes or technologies that are used by the franchisor and are made available to franchisees as part of the franchise agreement.
- Quality Control Manual:
- A manual containing the franchisor's quality control standards and procedures.
- Renewal:
- The process of continuing the franchise agreement after the initial term has expired.
- Royalty:
- A percentage of the franchisee's sales that is paid to the franchisor on a regular basis.
- Site Selection:
- The process of selecting the location for a new franchise unit.
- Sub-Franchising:
- A type of franchise agreement where the franchisee is granted the right to sub-license the franchise to another party.
- Subsidiary:
- A company that is controlled by another company.
- Support:
- Support refers to the assistance provided by the franchisor to franchisees, including training, marketing, and operational support.
- Trade Dress:
- The overall visual appearance of a franchise unit, including the color scheme, signage, and overall design.
- Trademark:
- A brand name, logo, or slogan that is legally registered and protected.
- Transfer:
- The sale of an existing franchise unit from one franchisee to another.
- Termination:
- Termination refers to the ending of the franchise agreement, either by the franchisor or the franchisee.
- Uniform Franchise Offering Circular (UFOC):
- A document that contains detailed information about the franchisor and the franchise opportunity, as required by federal and state franchise laws.
- Venture Lease:
- A type of lease agreement where the franchisor and franchisee share the costs and risks of opening a new unit.
- Venture Partner:
- A third-party company or individual that partners with the franchisor and franchisee to open a new unit.
- Waiver:
- Giving up a legal right or claim.
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