Franchise development. Part 1: Key terminology for franchising

Update: 04.06.2021
key terminology for franchising

Anyone who wants to create a franchise needs to take what steps to take if you have already decided to create a franchise or just think about this option for scaling your business.

I suggest starting with the key terminology that is relevant in the world at the moment.
First, you need to understand that in many developing countries for 2019 there is still no franchise law, and all that we will talk about is the usual terminology of world franchising experience, but in no normative acts of many growing states it not fixed.

What do we mean by franchise? We mean the transfer of trademark rights, the transfer of knowledge on how to conduct a specific business. Franchisees and franchisees are participants in franchising activities. A franchisor is a company that owns a trademark and can betray the right to use it under certain conditions.
On the other side of the process, there is a franchisee - a legal entity acquiring from the franchisor the right to conduct business under its brand name in a specific territory. Also, integral elements of franchising are lump-sum payment and royalties.

A franchise fee payment is a one-time payment that the franchise buyer pays to its owner, in exchange for the instructions for doing business, the right to use the trademark. Royalty is a monthly payment that a partner pays to the parent company of a franchised brand.

Another commonly used term is a franchisee book (franchise book, operation manual) - this is a business manual that is transmitted to the franchisee when buying a franchise. It is also necessary to think about entering international markets.

A Master Franchise is a legally secured exclusive right to sell a franchise and open points under a particular brand in a particular territory. States and countries.

Further, in the following posts, we will analyze specific steps. What you need to do to create a franchise.

Our company TopFranchise has a proven program for creating a franchise named Quick Start.

Franchise development

Vasil Gazizulin

Written by
Vasil Gazizulin
Founder of
CEO Expedition 2009 - 2014
Author of a book «GROW WITH A FRANCHISE»

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