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Franchise Glossary |
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- Advertising Fee
An annual fee paid by the franchisee to the franchisor for corporate advertising expenditures; usually less then three percent of the franchisee"s annual sales and usually paid in addition to the royalty fee. Not all franchisors charge advertising fees.
- Agent
An individual who can act on the behalf of another. An individual who acts on the behalf of a corporation and can legally bind the corporation.
- Agreement
Also called the Franchise Agreement. It is the contract that you sign with a franchisor.
- Approved Products
Proprietary products that a franchisee must purchase from the franchisor. Also, products that must be purchased from approved suppliers. The goal is to achieve uniform quality assurance among all franchisees.
- Arbitration
A process in which a neutral third party hears both sides to a dispute and renders a decision. It is an alternative to using the legal process, which can be costly, and time consuming.
- Area Development Rights
The rights granted to a franchisee to develop a certain number of franchises within a specified geographic area, usually within a certain time frame.
- Area Franchise
(a.k.a. Development Agreement, Master Franchise)
A franchise granted to develop a defined geographical area. May include a strict performance schedule and franchise sales rights.
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