{"id":9316,"date":"2016-12-28T11:26:09","date_gmt":"2016-12-28T16:26:09","guid":{"rendered":"https:\/\/www2.franchisegator.com\/articles\/?p=9316"},"modified":"2022-08-04T17:22:35","modified_gmt":"2022-08-04T21:22:35","slug":"15-common-franchise-terms-and-what-they-mean-12624","status":"publish","type":"post","link":"https:\/\/www.franchisegator.com\/articles\/15-common-franchise-terms-and-what-they-mean-12624\/","title":{"rendered":"15 Common Franchise Terms and What They Mean"},"content":{"rendered":"<p>When searching for a franchise it\u2019s important to know the lingo. Here is a list of the most common franchise terms to get you in the know as you begin the investigation process:<\/p>\n<p><strong>Advertising Fee:<\/strong> A contribution paid by the franchisee into the franchise system\u2019s advertising fund for regional\/national advertising campaigns. May be a flat fee or percentage of franchise sales typically paid on a monthly basis.<\/p>\n<p><strong>Area Developer:<\/strong> Rights granted to open a designated number of franchise units in a specific geographic area within a designated time frame.<\/p>\n<p><strong>Broker:<\/strong> A third-party salesperson who receives a fee or commission for the sale of a franchise on behalf of the franchisor.<\/p>\n<p><strong>Disclosure Document:<\/strong> Also known as the Franchise Disclosure Document (FDD), a legal document all franchisors are required to provide to prospective franchisees by the Federal Trade Commission (FTC) outlining the franchisor\u2019s history, financials, investment costs, contract obligations, and more.<\/p>\n<p><strong>Exclusive Territory:<\/strong> A designated geographic area provided for a franchisee to have the sole right to operate.<\/p>\n<p><strong>Franchise Agreement:<\/strong> The franchise contract signed by both the franchisor and franchisee outlining the responsibilities of both parties.<\/p>\n<p><strong>Franchise Consultant:<\/strong> A business coach who may help franchisees select a franchise business to buy or help a business become a franchise.<\/p>\n<p><strong>Franchise Fee:<\/strong> The initial fee a franchisee pays the franchisor for the rights to use the trademark and business system typically paid at the signing of the franchise agreement.<\/p>\n<p><strong>Franchisee:<\/strong> A person or entity who purchases the right to use and do business under a franchise system\u2019s trademark.<\/p>\n<p><strong>Franchisor:<\/strong> The owner of a franchise system\u2019s trademark who grants usage rights to a franchisee.<\/p>\n<p><strong>Initial Investment:<\/strong> Includes all start-up costs for opening a franchise unit including the franchise fee, real estate, equipment, and inventory, working capital and more.<\/p>\n<p><strong>Master Franchisee:<\/strong> Rights given to sub-franchise within a designated area for a portion of franchise and royalty fees.<\/p>\n<p><strong>Net Worth:<\/strong> Total assets after liabilities.<\/p>\n<p><strong>Royalty Fee:&nbsp;<\/strong>Monthly payments made by the franchisee to the franchisor, typically a percentage of sales.<\/p>\n<p><a title=\"\" href=\"\/\">Click here<\/a> to begin your search for a franchise today.<\/p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When searching for a franchise it\u2019s important to know the lingo. Here is a list of the most common franchise terms to get you in the know as you begin the investigation process: Advertising Fee: A contribution paid by the franchisee into the franchise system\u2019s advertising fund for regional\/national advertising campaigns. May be a flat <a href=\"https:\/\/www.franchisegator.com\/articles\/15-common-franchise-terms-and-what-they-mean-12624\/\" class=\"more-link\">&#8230;<span class=\"screen-reader-text\">  15 Common Franchise Terms and What They Mean<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":9317,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26,24],"tags":[],"class_list":["post-9316","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-for-starters","category-franchise-experts"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>15 Common Franchise Terms and What They Mean - Franchising Blog<\/title>\n<meta name=\"description\" content=\"When searching for a franchise it\u2019s important to know the lingo. 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