If you are new to the world of franchising, the terminology used on a day-to day basis can be mind-boggling. Here we summarize the most used words so you can fully understand when reading about franchise opportunities and speaking with businesses.
Absentee ownership: An option offered by some franchisors that allows a person to own a franchise without being actively involved in its day-to-day operations.
Advertising Fee: An amount paid by the franchisee to the franchisor as a contribution to the franchise system’s advertising fund(s). The fund is typically established to pay for the creation and placement of advertising, and is used to offset the franchisor’s administrative costs relating to “retail/brand” advertising. Payments are typically calculated as a percentage of gross sales.
Approved Advertising Materials: Materials provided by the franchisor for the franchisee’s use in their local market, or materials created by the franchisee which the franchisor has approved for use.
Approved Products: Specified products which a franchisee must buy for use in their business. Franchisor may also specify an authorized supplier. Generally established to control the quality of the products used or sold by the franchisee in conducting their business.
Approved Site: A location that the franchisor determines will satisfactorily meet its criteria. Site approval by franchisor is generally not an indication of the sales potential or success of the location.
Area developer: An area developer agrees to open a certain number of franchise units in a large territory within a specified time period. They may open and operate the units themselves or recruit other franchisees to open them.
Business Format Franchising (BFF): A franchise occurs when a business (the franchisor) licenses its trade name (the brand) and its operating methods (its system of doing business) to a person or group (the franchisee) that agrees to operate according to the terms of a contract (the franchise agreement). The franchisor provides the franchisee with support and, in some cases, exercises some control over the way the franchisee operates under the brand. In exchange, the franchisee usually pays the franchisor an initial fee (called a franchise fee) and a continuing fee (known as a royalty) for the use of the trade name and operating methods. BFF describes the system of delivery, not the specific product or service associated with the delivery as in Product or Trademark Franchising.
Business Plan:A document that thoroughly explains the financial and operational goals for a franchise and details the processes for meeting these goals. There are a number of free business planning tools that you can utilize.
Capital Required:The initial investment or required amount of investment necessary to conduct the business.
Conversion Franchising:The conversion of an existing business within the franchisor’s industry into the franchise system. Sometimes includes experienced operators without operating locations.
Continuous Training:The educational resources and support provided to franchisees subsequent to initial training.
Disclosure Document:Also known as the Franchise Disclosure Document (FDD).It provides information about the franchisor, the obligations of the franchisor and the franchisee, fees, start-up costs, and other required information about the franchise system. It includes a listing of current and former franchisees. In addition the document will contain the franchise and other agreements and exhibits. It does not typically include unit earnings information.
Franchise Agreement:The legal document that specifies the obligations and responsibilities of, and between, the franchisor and franchisee.
Franchise Disclosure Document:Contains details about the franchisor’s background, business operations, financial situation, cost structure, current franchisees and franchise locations, and more. Potential franchisors are required to provide this information.
Franchise Fee:The initial payment made by the franchisee to the franchisor granting the right to use the franchisor’s name and other assets. It is essentially the entry cost for joining the franchise group.
Franchisee:Also known as a franchise operator, this person enters into an agreement with the franchisor to start and operate a franchise.
Franchisor:The owner of an established product or service who grants a franchisee the right to do business while utilizing the existing brand name, trademarks, service marks, processes and other intellectual property.
In Good Standing:A franchisee who operates their business in compliance with the franchise operator’s guidelines and who is current on all financial obligations.
Initial Training:Training provided by franchisors in order to help franchisees get their operations up and running successfully. Not all franchisors offer initial training, so it is critical to make sure that the one you invest in has a proven franchise training methodology.
Inquiry:A request for information about a franchise, which can be submitted online, over the phone or via other methods.
Leadership Team:The group that sets the direction for the franchise as a whole. That’s why, when selecting a franchise, it is important to make sure that its leadership team has proven experience and a track record of success.
Manual:A reference document, which is published, maintained and distributed by the franchisor that specifies the proper methods for operating a franchise within the system.
Market Introduction Program:A combination of marketing, advertising and public relations activities used to promote a new franchise within its territory.
Master Franchise:A franchisee who has the right to operate within a specific territory and who can divide his or her territory in order to sell sub-franchises to other franchisees.
Mobile Franchise:A franchising model in which the franchisee goes directly to the customer to do business as opposed to having the customer come to an office or storefront. Mobile franchises offer some unique benefits to new franchisees.
Refranchising:When a franchisee sells his or her franchise to a new operator. This process is also known as retro franchising or franchise resales, and it offers some distinct advantages and disadvantages to aspiring franchisees.
Return On Investment (ROI) – the calculations or expectations that franchisees work on to assess when they can ‘break even’ on their initial investment in the franchise and start earning profits.
Royalties:Fees charges monthly or annually to a franchisee for the continued use of the franchisor’s name and service marks. Some companies charge a percentage of income or profit, which means the better your business does, the more expensive your royalties.
Service Mark:A form of trademark that is used to identify a service (as opposed to a product).
Start-Up Costs (Initial Investment):The initial investment that the franchisee will make in becoming a franchisee. It is also known as an Item 7 disclosure. Generally includes the franchise fee, the cost of fixed assets, leasehold improvements, inventory, deposits, other fees and costs, and working capital required during the startup period.
Strategic Supplier:Vendor with whom a franchisor has negotiated favorable pricing, allowing individual franchisees to leverage buying power of a larger organization.
Successor Agreement:Franchisee’s ability to continue in the business for additional terms following a successful completion of their initial term.
Support Representative:A representative of the franchisor who provides assistance and guidance to franchisees in order to help them execute the business model and achieve sales goals.
Territory:A predetermined area in which the franchisee has the right to sell the goods or services offered by the franchisor. Territories can be exclusive or nonexclusive, and they are determined by a wide range of factors, including geographic footprint, postal code, or population, to name a few.
Trademarks:Trademarks can be one or many words, sounds or designs used to distinguish the goods or services of one person or organization from those of others. Franchisees acquire the right to use the franchisor’s trademarks in their operations.
Turnkey:A term used to describe a location which is provided to a franchisee fully equipped and ready to operate.
If you are thinking about becoming a franchisee and terms like “growth,” “support,” “flexibility,” and “profitability” are important to you, Skedaddle Humane Wildlife Control speaks your language.
Whether you are currently a part of the wildlife industry, or you are in a completely unrelated field, we make it easy for entrepreneurs with the right attitude to become Skedaddle Humane Wildlife Control franchisees. It all comes down to your approach to ownership and your drive!
If you want to learn more about joining Skedaddle Humane Wildlife Control, we invite you to start the process by calling 877-662-2877 or visiting www.skedaddlefranchise.com