As you look through the options for your franchise, or perhaps you are just considering buying in, now- you may come across a few terms that you may not have heard before. Here, we will go into a few terms that you may see, and what you might need to know about them. The terminologies not so hard when you have a basic grasp of the things that you are looking at, and knowing these definitions may make wading through the information a little bit easier.
FTC Or Federal Trade Commission Rule on Franchising
In 1979, US legislators passed certain rulings that would protect a potential owner/operator or franchisee. The rule made it so that franchisers had to make full disclosure of many aspects of their franchise, as well as the contract, personal business history and their companies. Quite a few states took this a step further in making their own disclosure and registration laws, making things much more safe for potential franchisees to find a business that really works for them. In the Summer of 2007, this rule was relaxed a bit to make it possible for both the franchisees and the franchisers to benefit in a less stringent set of guidelines.
Service Mark
This is the name, essentially. Franchisers will grant the franchisee use of copyrighted materials- so basically, service mark is very similar to trademark, though it generally refers to a service and not a product.
Business Format Franchise
This is basically where the franchiser sets out a guideline or almost a blueprint for the way that the business should be run. The franchisee is given a complete format for the way that things are to be done under this.
Lease Franchise
In this option, the franchiser leases the property or premises to a franchisee as a rental, and this is generally based on a turnover system.
Joint Venture
A joint venture is one way that a franchiser may bring its franchise to another country. Under this popular method, the franchiser partners up with an individual in that country and with shared costs, things tend to go a bit smoother. However, the partnerships are not always equal and sometimes one party does end up buying out the other.
Turnkey
Turnkey opp orations generally are all set up and ready to go. Usually referring to retail franchises, this makes it so that when the franchisee takes over, everything is already in place to do business and transitions are usually a bit easier with little set up needed.
There are many terms you will hear as you go about researching your franchise options and keeping yourself well informed will definitely help you to see the many different areas of franchising and be better educated. Also, this will help a great deal when researching individual franchises on the INTERNET, as professionals tend to know these same terms and use them when discussing their experiences with different franchises out there.