Master the Terms that Franchises, Banks, and Lawyers use before you invest.

Do You Really Know Your Franchise Terms? 

The  franchise terms and glossary of  has been meticulously constructed to be as accurate as possible. While some franchise terms are based on generally accepted definitions, other franchise terms may be subject to differing interpretations and uses. Franchising is an evolving and changing business format and, as such, the terminology used by its practitioners is similarly fluid. The intent of this glossary is to give the reader an introduction to some of the language used in franchising. It is not intended to be all inclusive but merely one tool to understanding this unique business format. Other useful resources include The FDD Exchange, a collection of Franchise Disclosure Documents and The Educated Franchisee, a site designed to enlighten those seeking more information on franchising.

From our friends at WIKIPEDIA: Franchising is the practice of using another firm’s successful business model. The word ‘franchise’ is of Anglo-French derivation – from franc – meaning free, and is used both as a noun and as a (transitive) verb. For the franchisor, the franchise is an alternative to building ‘chain stores’ to distribute goods that avoids the investments and liability of a chain. 

The franchisor’s success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business. We’ve endeavored to be as thorough and accurate as possible, however, as Franchising is an ever-evolving business format, new franchising terms and terminology will undoubtably be introduced over time. If you  can’t find a clear definition to a Franchise Term in this Glossary, please Contact Us with the term and we’ll make every effort to update out Franchise Terms Glossary website.

Contributors & Acknowledgements

Thanks must be given for the substantial assistance received from:

  • The International Franchise Association (
  • The Educated Franchisee (
  • Kenneth S. Kaplan, General Counsel, Kaplan Franchise Group
  • Lee Plave, CFE, Partner, Plave Koch PLC
  • Additional sources include, but are not limited to, and

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