Start-up costs: All upfront (and non-permanent) costs that will be spent on starting a franchise business. This may include deductibles, construction costs, equipment purchases, legal fees and various other fees. Master franchise: a franchise agreement in which the franchisor agrees to allow a franchisee to sell franchised units in a given geographic area. A franchisee master may, but does not necessarily own one or more franchises in his assigned territory. The franchise agreement will settle everything about how the franchisee manages the new business and explain what they can expect from the franchisor. Learn more about what is written in the agreement and what it means if you decide to become a franchise or become a franchisee. Registration states: Fifteen states require franchisors to register their DDDs with a public authority before they can legally sell franchises within that state. A list can be accessed at FTC.gov. Master-Franchise: A franchisee master serves as a sub-right for a given territory. Master franchisees can issue FDDs, register new franchisees, provide logistical support and benefit from a reduction in territorial royalties. External advisor: employee or contract of the franchisor whose mission is to help and assist franchisees on site on their site. Typically, a geographic region is assigned to field advisors, but this may vary depending on the size of the franchise system, business model or other factors. Term of contract: This determines the validity of your franchise agreement – usually between five and twenty years.

At the end of your term, if you are a reputable franchisee, most franchisors will allow you to renew your contract for a percentage of the current franchise fees. Supplier:A company that provides a service or product to another company. Franchisors often establish « preferred » supplier/supplier relationships that allow franchisees to obtain negotiated discount prices. Resale – a franchise area already set up by a franchisee and put up for sale because the original franchisee wants to make his investment, continue to move or simply retire. More expensive to buy than a « virgin » franchise, a resale franchise has the advantages of continuous customer base, recommendations, goodwill and revenue from day one. A franchise agreement is a license that defines the rights and obligations of the franchisor and franchisee. This agreement aims to protect the intellectual property of the franchisor (IP) and to ensure the consistency of the operation of each of its licensees under its brand. Even if the relationship is codified in a written agreement that must last up to 20 years, the franchisor must have the ability to develop the brand and its consumer offering to remain competitive.

This is a legally binding agreement. It explains in detail what the franchisor expects of you as a franchisee, in the way you operate every facet of the business. There is no standard form of the franchise agreement, as the terms and methods of the business vary considerably from different franchises, depending on the type of business. Licensing fee: In addition to the franchise fee, many franchisors charge franchisees a fee for what they sell. This tax is paid at specified time intervals. B, for example, weekly, month or year.