The main concept of franchising

The main concept of franchising

Below are the basic terminology with explanations, helps entrepreneurs understand the principle of operation of the business model:


It represents a system of business relations between the two legal parties, where the franchisee is promoting goods or services on the market. The franchisee gets from the franchisor the right to conduct business on behalf of the latter and operates at an agreed with the franchisor scheme, having involved proprietary technology Franchisor, adhering strictly to the prescribed in the contract concept. Operation using a franchise system is less risky financially and protects the franchisee from the risks, that await aspiring entrepreneurs, opening your own business from scratch. Besides, The franchisee operates under the brand franchisor and save their own funds, that would have been spent on the promotion of the new brand when starting a business from scratch. Effective proven technologies and profitable business ideas Franchisor franchisee help start profiting quickly, part of which will be sent in advance to the Franchisor prescribed in the contract conditions.


This package of rights, Franchisees who gets franchisee, to carry out doing business under the brand franchisor. As part of a package of documents spells out the duties and rights of each party regarding the use of branded items and corporate identity, trademarks and proprietary technologies.


This entity, has the right to create unique technology and business activities, as well as owning franchise rights, Franchisees are sold with mandatory condition for receiving regular payments from the latter as a result of the success of the franchise project. The franchisor can be any company, has achieved success in the market through the use of their own unique methods, technology and ideas. After that, the company is starting to get consistently high profits, it can realize the market's own franchise.


This is an individual entrepreneur or a company, Bought in the framework of a franchise contract package franchise rights to establish and carry out business activities in accordance with the conditions specified Franchisor. All the activities carried out under the brand franchisor with a regular listing last stipulated in the documents of the profits.

lump-sum payment

It is a registration fee, Franchisee carried out in favor of the franchisor at the time of the transaction for buying a franchise. Some Franchisors Franchisee free from lump-sum payment at the stage of setting up a business. Payment is a payment for the purchase of unique technology, the right to work under a recognizable brand and transfer some of the secrets of the company Franchisor Franchisee.


This payment, Franchisee undertaken on a regular basis in favor of the franchisor in accordance with the contract for consulting and service in the process of creation and development of new business. Royalties can be fixed in the contract in the form of a specific amount, or may be a specified percentage of the profits. franchisors, performing the function of the supplier of the goods Franchisee, often include royalty in the price of its products.

Marketing services

To develop new business and promote the market Franchisee, including advertising and marketing support, Franchisor often for a fee.

Franchise agreement or franchise

It is an agreement, in conditions which stipulate the use of proprietary technologies, techniques, style, brand and franchisor of goods for the base and the promotion of new business activities under the existing brand. Mandatory items franchising contract is a term of the franchise, the amount of the lump-sum fee and royalty rate, rights and responsibilities of the Franchisee. Sign such a contract can legal entities and individual entrepreneurs.

Intellectual property

It is a view of the rights and information products, which transmits to the franchisor Franchisee use after the signing of the franchise agreement. Intellectual property rights also include the use of unique ideas, exclusive techniques and technologies, developed and implemented by the Franchisor.

Master franchise

Is the right to sell franchises in the territory, which already operates Franchisee. If the franchisee acquires the master franchise for a particular region, he gets the right to sell a franchise here.

Master franchisee

it Franchisee, who acquired the right to carry out business activities in a specific territory. Thus business franchise at indicated in this region can only perform said master franchisee. Besides, master franchisee receives the right to exercise the franchise on behalf of the franchisor other franchisees, carrying out education and training of new franchisees, as well as management activities are his subordinate franchisees on the same conditions, which are set out in the contract, concluded between franchisors and franchisees.

Franchise and Product name

It is the purchase of exclusive rights, It applies only to a specific product or brand. for example, Franchisees can operate under the brand franchisor or take advantage of all the opportunities offered by the brand name only. This type of franchise is characterized by a minimum number of rights Franchisee, and therefore franchisors offer him only a small list of proprietary tools.

Franchising business format

Characterized by the purchase of a full package of rights for the franchise. Thus at the disposal of a number of franchisee receives all available tools, products and technologies for the construction of a new business.

production franchising

It is the franchise views, When Franchisor Franchisee transmits the necessary equipment and production technology for the production of certain goods. Franchisee himself engaged in production of goods and sells it under the brand franchisor.

certified supplier

It is supplier of raw materials or components for the organization prozvodstvennogo process for the production of branded products, which was approved by the Franchisor about the quality of products supplied.


Is a list of rules, requirements and recommendations on the ground and doing business, including step by step instructions for businessmen, beginning work on the franchise.

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