Terms associated with franchising
Are you considering the idea of entering into a franchising business? You might come across a few terms, which may confuse you a little. An understanding of the many franchise terms will help you to understand the business in a better manner. Learning the following terms will certainly enable you to become well-versed with the franchising business.
Service Mark This particular term is commonly used in the franchising business. The Service Mark is similar to a trademark and is an identification of the copyrighted materials. This mark is granted by the franchisor itself. However, it generally stands for a service and not for any product.
Business Format Franchise The business format franchise concerns the guidelines that are initially laid down by the franchisor. Such rules and regulations provide a rigid framework to the franchisee. For instance, the strict rules will determine the quality of service that needs to be replicated by the franchisee. The risk factor reduces considerably with this particular approach.
Lease Franchise and Joint Venture The franchisor offers the property or the premises for conducting business on lease or on a rental basis. This particular agreement is based on a turn over system and helps the franchisor immensely. In joint ventures, the franchisor enters into a partnership with another organization, possibly while conducting business in some other territory. This particular approach proved beneficial to the franchisors as the costs are shared between the two companies.
It is advisable to get accustomed to such terms before setting up a franchise business.