Franchise Glossary — 25 Franchising Terms Entrepreneurs Must Know

Starting a franchise business can be an incredibly exciting endeavor. However, if you are not familiar with some common franchising terms, it can also be quite confusing. That’s because the franchise industry has its own jargon and phrases, and it can seem like a foreign language to those who are new to the industry.

Glossary of Franchise Terms

There are common franchising terms every entrepreneur must know.

Fortunately, we’re here to translate and make sure that you are prepared to talk the talk and make the right career decision for you. Here are 25 of the most common franchising terms every entrepreneur — including you — must know:

Advertising Fund: A pool of money collected from franchisees and used collectively for national franchise marketing and advertising initiatives, which complement the marketing and advertising of individual franchise operators.

Business Plan: A document that thoroughly explains the financial and operational goals for a franchise and details the processes for meeting these goals. There are a number of free business planning tools that you can utilize.

Continuous Training: The educational resources and support provided to franchisees subsequent to initial training.

Franchise Agreement: The legal document that specifies the obligations and responsibilities of, and between, the franchisor and franchisee.

Franchise Disclosure Document: Contains details about the franchisor’s background, business operations, financial situation, cost structure, current franchisees and franchise locations, and more. Potential franchisors are required by the Federal Trade Commission to provide this information.

Franchise Fee: The initial payment made by the franchisee to the franchisor granting the right to use the franchisor’s name and other assets. It is essentially the entry cost for joining the franchise group.

Franchisee: Also known as a franchise operator, this person enters into an agreement with the franchisor to start and operate a franchise.

Franchisor: The owner of an established product or service who grants a franchisee the right to do business while utilizing the existing brand name, trademarks, service marks, processes and other intellectual property.

In Good Standing: A franchisee who operates their business in compliance with the franchise operator’s guidelines and who is current on all financial obligations.

Initial Training: Training provided by franchisors in order to help franchisees get their operations up and running successfully. Not all franchisors offer initial training, so it is critical to make sure that the one you invest in has a proven franchise training methodology.

Inquiry: A request for information about a franchise, which can be submitted online, over the phone or via other methods.

International Franchise Association: The franchise industry’s trade association, which is headquartered in Washington, D.C.

Leadership Team: The group that sets the direction for the franchise as a whole. That’s why, when selecting a franchise, it is important to make sure that its leadership team has proven experience and a track record of success.

Manual: A reference document, which is published, maintained and distributed by the franchisor, that specifies the proper methods for operating a franchise within the system.

Market Introduction Program: A combination of marketing, advertising and public relations activities used to promote a new franchise within its territory.

Master Franchise: A franchisee who has the right to operate within a specific territory and who can divide his or her territory in order to sell sub-franchises to other franchisees.

Mobile Franchise: A franchising model in which the franchisee goes directly to the customer to do business as opposed to having the customer come to an office or storefront. Mobile franchises offer some unique benefits to new franchisees.  

Refranchising: When a franchisee sells his or her franchise to a new operator. This process is also known as retrofranchising or franchise resales, and it offers some distinct advantages and disadvantages to aspiring franchisees.   

Royalties: Fees charges monthly or annually to a franchisee for the continued use of the franchisor’s name and service marks. Some companies charge a percentage of income or profit, which means the better your business does, the more expensive your royalties. Bin There Dump That, however, charges a straightforward, fixed cost.

Service Mark: A form of trademark that is used to identify a service (as opposed to a product).

Startup Costs: The expenses that need to be paid before opening a franchise. These costs can include the franchise fee, equipment purchases, down payment on office space, signage, permits and initial inventory.

Strategic Supplier: Vendor with whom a franchisor has negotiated favorable pricing, allowing individual franchisees to leverage buying power of a larger organization.

Support Representative: A representative of the franchisor who provides assistance and guidance to franchisees in order to help them execute the business model and achieve sales goals.

Territory: A predetermined area in which the franchisee has the right to sell the goods or services offered by the franchisor. Territories can be exclusive or nonexclusive, and they are determined by a wide range of factors, including geographic footprint, zip code or population, to name a few.

Trademarks: Trademarks can be one or many words, sounds or designs used to distinguish the goods or services of one person or organization from those of others. Franchisees acquire the right to use the franchisor’s trademarks in their operations.

What Words Are Most Important To You?

If you are thinking about becoming a franchisee and terms like “growth,” “support,” “flexibility,” and “profitability” are important to you, then Bin There Dump That speaks your language.

We are an established leader in the growing $40 billion trash management industry, and we are growing ourselves with more than 60 franchise operators throughout the United States and Canada — and counting. We provide extensive training and ongoing support, and we not only value work/life balance; we help you find it.

Plus, we offer you the chance to earn a great income on your terms while building a business you can pass down to your family.

Learn more about becoming a Bin There Dump That franchisee today!

 

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