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The length of time the Franchise Agreement is in effect. If typical revenue and expense scenarios hold, the franchisee should be able to recover his initial investment within the initial term of agreement. |
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The franchisee's territory is the geographic area or domain in which his business operates. The franchisor may grant exclusivity to the territory, meaning no other franchised or company-owned outlet may open in that territory, or the rights of first refusal to the franchisee, meaning that if the area can support other outlets, the franchisee is given first option to do so. The franchisor may give rights to the franchisee only where his location stands, no more. |
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1. Single Unit Franchise The franchisor grants franchises to an individual or entity one outlet at a time.
2. Area Multi-Unit Franchise The franchisor grants the franchisee the right to open several units within a territory, within a prescribed time frame. Part of the Franchise Fee for the units are paid upfront, with the balance for each unit being paid upon signing of the individual franchise agreement.
3. Master Franchise (Area or Country) The Master Franchisee is both a franchisee and a franchisor. As a franchisee, he should open his own franchised units. As a franchisor, he is also responsible for finding, granting, and supporting sub- franchisees. For his effort, the Master Franchisee gets a share of the fees due the franchisor. |
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Franchising is a contract or agreement, express or implied, oral or written, between two or more persons by which:
A franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan prescribed in substantial part by a franchisor;
The operation of the franchisee’s business pursuant to that plan or system as substantially associated with the franchisor’s trademark, service mark, tradename, logo type, advertising, or other commercial symbols designating the franchisor or its affiliates; and
The franchisee is required to pay directly or indirectly, a franchise fee. |
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An independent business person or novice entrepreneur who has been granted by the franchisor the right to duplicate its entire business format at a particular location and for a specified period, under terms and conditions set forth in the contract (franchise agreement). |
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