NFIB

What Does it Mean?
08/ 14/ 2002

Understanding the franchising concept means getting a handle on a whole new vocabulary of terms. Here are some of the basics:

Conversion franchisee--An independent businessperson who joins the franchise system, changing the business name and adopting the franchise system's methods of operation.

Franchisee-Owns and operates a business using a well-known company brand, its name, products and marketing resources. In exchange for an operating strategy, the franchisee pays a start-up fee and ongoing royalties.

Franchise fee-- A flat fee paid upfront to the franchisor that is the cost of joining the system. Ranges from $10,000-$100,000.

Franchisor--The person or company that licenses its trade name and operating methods to the franchisee.

Registration--Some states require the franchisor to send the state its disclosure document for approval prior to offering franchises. No registration is required at the federal level.

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This article originally appeared in the August/September 2002 issue of MyBusiness magazine.

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