UK Franchise Consultants - Franchise Your Business Report
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Franchise Overview
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What is a franchise ?
Key Franchise Terms and Definitions
What is a franchise?
A franchise is a legal agreement that allows an independant business owner (franchisee) to trade using the trademark, trade name and business format of the franchisor (owner of the original business) in return for a fee and ongoing royalties or support fee.
The franchisor also provides to the franchisee a complete turnkey business package which enables them to operate the business in a specified territory after training. The franchisor will also provide ongoing support and assistance to the franchisee in return for an ongoing royalty and / or support fee.
In many franchises the franchisor will also supply or stipulate the supplier of any products or services that are required to run the franchise. This helps to protect the franchise brand and provides an additional revenue source for the franchisor as buying power increases and additional supply routes are created.
Key Franchise Terms and Definitions
Franchise - A franchise is a legal agreement that allows an independant business owner (franchisee) to trade using the trademark, trade name and business format of the franchisor (owner of the original business) in return for a fee and ongoing support fees or royalties.
Franchise Agreement - The legal agreement between a franchisor and the franchisee which allows the franchisee to trade using the trade name and business format of the franchisor. It also dictates how the franchise must be run and stipulates the various obligations of each party. The franchise agreement will also cover areas such as selling the franchise and franchise territory.
Franchise Prospectus - A document or brochure which provides an overview of the franchise proposition.
Franchisor - The franchisor is the owner of the original business who has adopted a strategy to expand through the sale of franchises.
Franchisee - An independent business owner who acquires the right to trade using the trademark, trade name and business format of the franchisor.
Franchise fee - A fee paid by the franchisee to the franchisor. This fee pays for the training in the business methodology of the franchisor and the right to use their trademark, trade name and business format in a defined territory. This fee may also cover the cost of stock, equipment and other items. This will be defined in the Franchise Prospectus and Agreement.
Franchise Territory - Most franchises will have a pre defined exclusive trading area. This means that no other franchisees can trade in your area and it also prevents you from trading outside your own franchise territory.
Operations Manual - The Operations Manual contains the Operating Systems and Processes for the business which the franchisee has to follow.
Royalty fee / Support Fee - A continuous ongoing fee paid by the franchisee to the franchisor for their ongoing support and assistance. This could be a monthly fee and / or a royalty fee which is usually a percentage of the revenue earned by a franchisee. This will be defined in the Franchise Agreement. Some franchises will also stipulate that a marketing fee must be paid to cover brand advertising and promotion which benefits all franchisees.
Trademark / Trade name - A brand name or symbol used to distinguish a particular product or service which must be registered.
Key Franchise Terms and Definitions
What is a franchise?
A franchise is a legal agreement that allows an independant business owner (franchisee) to trade using the trademark, trade name and business format of the franchisor (owner of the original business) in return for a fee and ongoing royalties or support fee.
The franchisor also provides to the franchisee a complete turnkey business package which enables them to operate the business in a specified territory after training. The franchisor will also provide ongoing support and assistance to the franchisee in return for an ongoing royalty and / or support fee.
In many franchises the franchisor will also supply or stipulate the supplier of any products or services that are required to run the franchise. This helps to protect the franchise brand and provides an additional revenue source for the franchisor as buying power increases and additional supply routes are created.
Key Franchise Terms and Definitions
Franchise - A franchise is a legal agreement that allows an independant business owner (franchisee) to trade using the trademark, trade name and business format of the franchisor (owner of the original business) in return for a fee and ongoing support fees or royalties.
Franchise Agreement - The legal agreement between a franchisor and the franchisee which allows the franchisee to trade using the trade name and business format of the franchisor. It also dictates how the franchise must be run and stipulates the various obligations of each party. The franchise agreement will also cover areas such as selling the franchise and franchise territory.
Franchise Prospectus - A document or brochure which provides an overview of the franchise proposition.
Franchisor - The franchisor is the owner of the original business who has adopted a strategy to expand through the sale of franchises.
Franchisee - An independent business owner who acquires the right to trade using the trademark, trade name and business format of the franchisor.
Franchise fee - A fee paid by the franchisee to the franchisor. This fee pays for the training in the business methodology of the franchisor and the right to use their trademark, trade name and business format in a defined territory. This fee may also cover the cost of stock, equipment and other items. This will be defined in the Franchise Prospectus and Agreement.
Franchise Territory - Most franchises will have a pre defined exclusive trading area. This means that no other franchisees can trade in your area and it also prevents you from trading outside your own franchise territory.
Operations Manual - The Operations Manual contains the Operating Systems and Processes for the business which the franchisee has to follow.
Royalty fee / Support Fee - A continuous ongoing fee paid by the franchisee to the franchisor for their ongoing support and assistance. This could be a monthly fee and / or a royalty fee which is usually a percentage of the revenue earned by a franchisee. This will be defined in the Franchise Agreement. Some franchises will also stipulate that a marketing fee must be paid to cover brand advertising and promotion which benefits all franchisees.
Trademark / Trade name - A brand name or symbol used to distinguish a particular product or service which must be registered.
