Franchise Glossary
Every franchising term, defined once — properly
Canonical, plain-English definitions of the terms behind every franchise deal — from master franchise to Item 19. Each definition is answer-first, sourced where an official rule applies, and free to cite with attribution to FRANWORLD.
Franchise
franquicia · الامتياز التجاري · 特许经营
A franchise is a legal and commercial relationship in which a brand owner (the franchisor) licenses its trademark, business system and ongoing supp…
Franchisor
franquiciador · مانح الامتياز · 特许人
A franchisor is the company that owns a brand and its business system and grants others the right to operate under it. The franchisor sets standard…
Franchisee
franquiciado · صاحب الامتياز · 加盟商
A franchisee is the independent person or company that buys the right to operate a business under a franchisor's brand and system. The franchisee f…
Master Franchise
franquicia maestra · الامتياز الرئيسي · 国家总特许经营
A master franchise grants an operator exclusive rights to develop a brand across an entire country or large territory — including the right to sub-…
Area Developer
desarrollador de área · مطوّر المنطقة · 区域开发商
An area developer buys the right to open an agreed number of units in a defined territory over a set schedule — but, unlike a master franchisee, no…
Single-Unit Franchise
franquicia de unidad única · امتياز الوحدة الواحدة · 单店特许经营
A single-unit franchise is the classic entry model: one owner operates one location of the brand. It requires the lowest investment of the four own…
Multi-Unit Franchise
franquicia multi-unidad · امتياز متعدد الوحدات · 多店特许经营
A multi-unit franchisee owns and operates several locations of the same brand, usually under a development agreement committing to an opening sched…
Country Rights
derechos de país · حقوق الدولة الحصرية · 国家独家经营权
Country rights give an investor the exclusive license to develop a franchise brand in an entire nation — typically structured as a master franchise…
Territory Rights
derechos territoriales · الحقوق الإقليمية · 区域经营权
Territory rights define the geographic area in which a franchisee may operate — and whether that area is exclusive. An exclusive (protected) territ…
Franchise Disclosure Document (FDD)
documento de divulgación de franquicia · وثيقة الإفصاح عن الامتياز · 特许经营披露文件
The FDD is the legal disclosure a US franchisor must give a prospective franchisee at least 14 days before any agreement is signed or money changes…
Item 19 (Financial Performance Representation)
Ítem 19 (representación de desempeño financiero) · البند 19 (بيان الأداء المالي) · 第19项（财务业绩陈述）
Item 19 is the only place in a US franchise disclosure document where a franchisor may make claims about how much franchisees earn. Any financial p…
Earnings Claim
declaración de ganancias · بيان الأرباح · 收益声明
An earnings claim — formally a financial performance representation — is any statement that tells a prospective franchisee how much they could make…
Initial Franchise Fee
canon inicial de franquicia · رسم الامتياز الأولي · 初始加盟费
The initial franchise fee is the one-time payment a franchisee makes to join a system — buying the license to the brand, initial training and openi…
Royalty Fee
regalía · الإتاوة الدورية · 特许权使用费
A royalty is the ongoing fee a franchisee pays the franchisor for continued use of the brand and system — most commonly a percentage of gross sales…
Total Initial Investment
inversión inicial total · إجمالي الاستثمار الأولي · 总初始投资
Total initial investment is the full estimated cost to open a franchise unit: the initial franchise fee plus real estate, build-out, equipment, inv…
Unit Economics
economía por unidad · اقتصاديات الوحدة · 单店经济模型
Unit economics are the revenue, costs and profitability of a single franchise location — average unit volume (AUV), margins, payback period and ret…
Franchise Agreement
contrato de franquicia · اتفاقية الامتياز · 特许经营合同
The franchise agreement is the binding contract between franchisor and franchisee that grants the license and sets the rules: term length, territor…
Sub-Franchise
subfranquicia · الامتياز من الباطن · 分特许经营
A sub-franchise is a franchise granted not by the original brand owner but by its master franchisee in a territory. The sub-franchisee operates uni…
Franchise Broker
bróker de franquicias · وسيط الامتياز · 特许经营经纪人
A franchise broker (or consultant) introduces prospective buyers to franchisors and is paid by the franchisor on success — commonly a large share o…
Franchise Resale
reventa de franquicia · إعادة بيع الامتياز · 特许经营转让
A franchise resale is the purchase of an existing, operating franchise unit from its current owner rather than opening a new one. Buyers get tradin…
Discovery Day
día de descubrimiento · يوم الاستكشاف · 考察日
Discovery day is the milestone meeting — at the franchisor's headquarters or virtually — where a qualified candidate meets the leadership team, see…
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