Franchise business

Franchise Related terms and Jargons Business Minded People Need To Know!

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While looking for a franchise opportunity, you may arrive over several franchise-related phrases and jargon related to the business type. This presumably could be of tremendous help to you. This column will guide you around the eight words you will examine while walking the franchise owner’s track.


A person purchasing a franchise is a franchisee. The franchisee purchases the power to perform a trade while using the franchisor’s title and subsisting brand.


This concerns the business that markets franchises to franchisees. Franchisors are essentially the father organization that has improved and entrenched methods, outputs, and branding. The same is then passed on to franchisees in exchange for a charge, i.e., franchise fee or royalty.

Franchise Fee: 

The up-front price a franchisee gives to a franchisor to perform a franchise company is called a franchise fee.

Franchise Agreement: 

Agreement is a mutual concern of two or more parties with a share of responsibility for each other. When you are inclined to spend on a franchise opportunity, you will need to review and sign the agreement that reads all the formalities and standards to be adhered to.

It is essentially a guarantee that describes the responsibilities of both the franchisor and the franchisee. In case of any miscalculations or inconsistencies between the parties concerned, this adjustment can prove acceptance and legality.

Royalty Fee: 

Moreover Franchise Fee, as a franchisee, the responsibility to give a fixed, regular price to the franchisor also exists. Royalty fees may be paid weekly, monthly, or annual, depending on the deal. However, the established amount may alter as the situation to pay changes, i.e., mostly it is a fee and seldom its portion of sales. However, there insists scope for various fields and benefits totaling on to royalty as a fee.

Master Franchise: 

A big investment with large market strings and functions discovers it exciting to maintain franchises at the federal level. There is a mechanism for such big labels, i.e., opting for the master franchise.

 Master franchises serve all the functions that the parent franchisor can, but at the regional level, implementing better customer maintenance with the proper communication for you as a franchisee.

Franchise Disclosure Document: 

This is a legitimate certificate needed by all parties and surveying firms instating the franchise deal. The report (FDD) includes:

· Fees and price of commencing a new franchise

· Franchisor past

· Contractual responsibilities

· Other important information relevant to the franchisor/franchisee association

The FDD usually is renewed periodically, depending upon the franchisor and franchisee compliance.

Franchise Business Model Jargons and Abbreviations:

COCO: Company Owned- Company Operated

FOCO: Franchise Owned Franchise Operated

COFO: Company Owned Franchise Operated

FOFO: Franchise Owned Franchise Operated

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