Key Glossary terms
Advertising FundA fund held by the franchisor where
franchisee advertising dollars are pooled together for
national and/or regional advertising.
Franchise
The right to use the trademarks, know-how and business
systems of the franchisor, and to promote and market
products and/or services using such trademarks, know-how and
systems.
Franchisee
The company or person who contracts with the franchisor
for the right to operate the franchise in return for payment
of an initial fee and/or an ongoing royalty.
Franchising
A way of doing business in which the franchisor gives the
franchisee the right to offer, sell or distribute goods or
services identified by the franchisor's trademark.
Franchisor
The company or individual that owns or controls the
trademarks and the franchise system and grants the right to
operate the franchise using the trademarks, know-how and
business systems of the franchisor.
Franchise System
A system of marketing and
distribution in which an independent businessperson, for a
fee, is granted the right to market the goods or services of
the franchisor according to the established standards and
practices of the franchisor.
Initial Franchise Fee
A one-time fee paid by the franchisee to the franchisor
in payment for the right to operate a franchised business
(also known as an Initial, Up-Front, or Licence Fee).
Franchise Model
A business model that has in place policies and
procedures to create consistency from one franchise location
to the other.
Royalty
An ongoing fee paid by the franchisee to the franchisor
often calculated as a percentage of sales.
Trademark
A name, symbol or other device identifying a product or
service of the franchisor that distinguishes them from
similar products and services supplied by third parties.