Glossary of Franchise Terms (A-E)

Business for sale insights: Our comprehensive Glossary of Franchise Terms (A-E) offers essential definitions to help you navigate the franchise industry. Expand your knowledge today

Glossary of Franchise Terms (A-E)

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Advertising Fee

The franchisor receives regular payments from the franchisee; these payments may take the form of a set sum of money or a share of gross sales. The royalty payment and this payout are comparable.

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Arbitration

A process for resolving disputes wherein an impartial third party and representatives chosen by each party participate.

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Area Franchise

A franchise agreement granted with the intention of establishing a certain area. This could involve rights to franchise sales and a stringent deadline.

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Assignment/Costs

To pay for corporate marketing and advertising, the franchise business receives a monthly fee, which is often a portion of the gross sales.

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Business Format Franchising

An operating system, trademark, and business structure are all included in the comprehensive business plan that the franchisor provides to the franchisee. This plan offers guidelines for important company operations and a framework for managerial choices. 

Finance and Business Planning Ideas.

Business Plan

A document that lists a company’s financial and operational objectives and includes thorough plans and budgets outlining how those objectives are to be met. This plan is a useful tool for business planning since it includes financial estimates and projections about the success of the company in addition to a marketing strategy.

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Capital Required

Capital is essential for starting and running a business effectively. It is required to fund initial investments, purchase inventory, hire employees, cover operating expenses, and facilitate business growth. Adequate capital allows a business to weather financial challenges and seize opportunities for expansion

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Company-owned Outlet

A company-owned outlet refers to a retail location or physical branch that is owned and operated directly by the company itself, as opposed to being franchised or operated by a third party. Having company-owned outlets gives businesses more control over operations and customer experience.

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Conversion Franchise

A conversion franchise refers to a type of franchise agreement where an existing independent business owner decides to convert their business into a franchise model. In a conversion franchise, the independent business owner becomes a franchisee and is required to comply with the franchisor’s system, operations, and standards. 

Copyright Symbol

Copyright

Copyright is a legal protection that grants exclusive rights to creators of original works, such as literature, music, art, and software. In a business context, copyright refers to the protection of intellectual property owned by a business. It gives the business the right to control how its creative works are reproduced, distributed, displayed, and performed.

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Demographics

In the business context, demographics refer to the characteristics and attributes of a particular population group. Demographic information typically includes factors such as age, gender, income, education, occupation, ethnicity, marital status, and geographical location. Understanding the demographics of a target market or customer segment is crucial for businesses.

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Designated Supplier

A designated supplier is a supplier that has been approved and selected by a business to provide specific goods or services. Designated suppliers typically have a long-term business relationship with the company, and they may be chosen based on factors such as quality, reliability, cost-effectiveness, and strategic compatibility.

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Disclosure

Disclosure in business refers to the act of providing relevant and accurate information to stakeholders, including customers, investors, employees, and regulatory bodies. It involves sharing information about the company’s financial performance, risks, governance practices, and other pertinent details that may impact stakeholders’ decision-making processes.

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Disclosure Document

A disclosure document is a legal document that provides comprehensive information about a business opportunity or investment offering. It is typically required by law and serves the purpose of informing potential investors or buyers about the risks, terms, and conditions associated with the opportunity.

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Dispute Resolution

Dispute resolution in business refers to the process of resolving conflicts, disagreements, or disputes that may arise between different parties in a business setting. This can include conflicts between employees, customers, suppliers, or business partners. The goal of dispute resolution is to find a mutually acceptable resolution in a fair and efficient manner.

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Distributorship

Distributorship in business is a type of business relationship in which a company grants the rights to sell its products or services to an independent third-party distributor. The distributor purchases the products from the company at a discount and then sells them to their own network of customers at a markup. Distributorship agreements typically specify the terms and conditions for the relationships.

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Equity Investment

Equity investment in business refers to the purchase of ownership shares in a company by an investor in exchange for a share of the company’s profits and potential increase in value. This type of investment is different from debt investment, in which investors lend money to the company in exchange for a fixed return on investment. 

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Earnings Claims

Earnings claims in business refer to statements made by a company regarding the potential earnings or financial performance of a business opportunity or investment. These claims provide estimated or projected figures that highlight the potential profitability or income that individuals can expect to earn from participating in the opportunity.

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Estimated Initial Investment

Estimated initial investment in business refers to the amount of capital required to start or acquire a new business. This includes all the expenses necessary to get the business up and running, such as equipment, inventory, licenses, permits, legal fees, marketing costs, and other associated costs.

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Exclusive Territory

Exclusive territory in business refers to a specific geographic area or market segment that is assigned exclusively to a particular individual, company, or distributor for the purpose of selling and distributing products or services. This means that within the designated territory, the assigned party has the sole right to sell the designated products or services.