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Franchise Glossary |
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- Real Property
Land and anything permanently affixed to the land. If an item can be removed from real property without significant effort or damage, it is considered personal property.
- Regional Development Agreement
(a.k.a. Regional Franchisee, Regional Coordinator
A franchise granted to develop or sell a person?s franchise rights to a third party in a defined geographical area. A portion of the franchise fee is normally paid in advance for a certain minimum number of franchise outlets which may be activated by the Regional Franchisee or sold at a disclosed fee to an individual franchise buyer. This agreement normally awards a share of the initial full franchise fee and a percentage of the royalty payment.
- Registration
A requirement in several states that specific information be submitted and approved by state regulatory authorities before franchises may be offered in that state. As compared to "disclosure" (see above), material contained in the registration is more extensive. For example\: a bond, fingerprints and pictures of principal officers may be required in a certain jurisdiction. Note\: the Federal Trade Commission has no provision for registration, thus the franchisor need only prepare an accurate and complete disclosure document conforming to the regulations.
- Renewal
You are granted a particular time frame in which to conduct business as a franchisee in your initial Franchise Agreement. The franchise agreement should also state the terms and conditions to renew that business relationship. Renewal is the resigning of a Franchise Agreement after the initial or subsequent terms of the franchise expires.
- Royalty
A royalty refers to a percentage of gross sales that you pay to the franchisor monthly.
- Rules of Operation (see Operations Manual)
Specific mandatory rules with which every franchisee and company outlet must comply. This document will change from time to time. By incorporation by reference in the franchise agreement, violation of the rules of operations allows the franchisor to cancel a franchise agreement.
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