Basic Franchise Agreement Terms
External advisor: employee or contract of the franchisor whose mission is to help and assist franchisees on site on their site. Typically, a geographic region is assigned to field advisors, but this may vary depending on the size of the franchise system, business model or other factors. Domain: a designated area with a franchised “unit” that is generally used for service-based or mobile franchise business models. Many franchisors offer exclusive territories to avoid conflicts between franchisees. Self-financing: the financing offered by the franchisor to franchisees to support expenses that may include upfront franchise costs, start-up costs, equipment and inventory, as well as day-to-day expenses such as payslips. Brand: Brands, brand name and logo that identify a franchisor that is licensed to the franchisee. Franchisee Satisfaction Index (FSI): A measure of franchisee satisfaction within a brand. Founded in 2007 by Business Review franchise, FSI is represented on a 100-point scale. The FTC rule provides that franchisors make available to potential franchisees a pre-sale document for the publication of franchises (FDD) to provide potential franchisees with the information necessary to purchase a franchise. Considerations include risks and rewards, as well as comparison of the franchise with other investments. As a franchisor or franchisee, it is important to understand standard terminology when talking about franchise issues.
If you know these terms, you can understand the related conversations and express yourself clearly. Franchise: A license describing the relationship between the franchisor and the franchisee, including the use of trademarks, fees, support and control. Point 19: the section of the franchise publication document that a franchisor can use to disclose rights to existing franchisees and business sites. Note that this data does not constitute a mandatory registration in the FDD and that the data provided may only represent a particular group of franchisees and/or franchisees. Always read the fine print to understand where the numbers come from, especially when comparing the claims of several brands on Section 19.