Franchise Dictionary

Let's get to know better some words of franchise world

• Asset management: the strategic management of investments.
• Benchmark: the reference and comparison value for a determinate parameter.
• Brand image: all what belongs to the aesthetics of a store and that brings ideally to the brand, creating an homogeneity between all franchisees.
• Broker: broker that deals with providing the franchisees contacts to expand its franchise network.
• Business of the services point of sale: all the activities conducted within and outside the point of sale.
• Catchment area: number of persons (usually expressed in thousands) which will represent the users of the opening franchised store. Upon this number one can presuppose the affiliate’s economic income and study a strategy to improve it.
• Clients: the final customers, who buy the services and/or the products/services from the affiliates
• Code of ethics: all duties related to particular professional categories of persons. In Italian franchise, franchisors should abide by the rules contained in the Assofranchising Regulation (Italian franchise Association) 
• Contract: agreement between franchisor and franchisee that fixes rights and duties of both parties and all the formal characteristics of the franchise formula under consideration.
• Corner: area of commercial premises used as exhibition and product sale space, which the franchisor grants the franchisee.
• Distribution Franchising: assumes that the franchisor has developed and tested techniques and business methods of selling products constituting the expertise that will distribute to its affiliate.
• Entrance fee: Compensation paid by the franchisee to the franchisor as a free grant or as a deposit to contribute to organizational expenses for the realization of the franchise program.
• Franchisee (or affiliate): entrepreneur who, through a contract, agrees to the franchise system committing to manage one’s own store according to precise clauses.
• Franchising (or commercial affiliation): contract, ruled by Law n.129/2004, which focuses on the continuative collaboration between the franchisor, who has a deep experience in a sector (industrial, commercial, of services) and the franchisee, independent entrepreneur who hopes to increase the turnover and the profitability of his company.
• Franchisor: entrepreneur who created the distribution system (franchising) and, granting others his expertise, undertakes the duty of checking and coordinating the functioning of the system.
• Gross Lettable Area (GLA): The gross floor area locable in a mall
• Industrial Franchising: in this system the partners, franchisors and franchisees, are two industrial companies. The first grants the other the license to manufacturing and brands patents, transfers its technology, assures a permanent technical assistance. The second manufactures and sells the goods produced by its factory by applying the expertise and the sales techniques of the franchisor.
• Know How: the knowledge and skill required to do something; practical knowledge for a specific task.
• Loan: agreement by which a person grants another the free use of a good for a fixed period.
• Location: the place where the shop is located.
• Mall: A large, often enclosed shopping complex containing various stores, businesses, and restaurants usually accessible by common passageways.
• Mark up: the profit margin that the franchisee must add to the total cost of production to determine the selling price of a product.
• Marketing: commercial processes to deepen the potential market knowledge of a product and organize its selling.
• Marketing mix: whole of marketing choices made by a company and, more specifically, the choice of the products to sell, targets whom address, price policies, etc.
• Master Franchise: agreement by which a franchisor gives the franchise exclusive rights for a certain territory to a person or entity. It’s a kind of contract used generally to undertake a franchise chain increase abroad.
• Master Franchisee: the franchisee that has obtained the right to sub-franchise in its exclusive zone, undertaking the responsibilities for developing, administration and checking of the  the affiliates’ network so created.
• Master Franchisor: the franchisor grants the master franchisee (upon direct or indirect payment) the right of exploiting his own expertise to increase his business, by stipulating franchise contracts to other affiliates.
• Merchandising: whole of used techniques in store for drawing the attention of the potential customer on a certain product: layout survey, advertising, promotions, etc. These instruments are provided by franchisor to franchisees.
• Operational manual: it contains the fundamental notions of the franchise project, that the franchisor transfers to the franchisee upon the signing of the contract.
• Patent: an administrative document granting an inventor sole rights to an invention and the right to enjoy the derived economic rights. It determines also the possibility for the patent holder to block the replication and use for a fixed time.
• Pilot point: name given to a retail shop for proof of ownership of the franchisor, used to test the program before its franchising practice. The use of the pilot unit becomes indispensable in international franchise, especially when the franchisor has little knowledge of the new market, its customs and traditions
• Retail shop (point of sale): shop whose characteristics and image management should be the ones established by operations manual and franchise agreement.
• Return On Investment (R.O.I.): in the franchise system it indicates the profitability of the capital invested by the franchise. It’s calculated by subtracting the operating profit to total investments.
• Royalty: a percentage required by the franchisor to the franchisee for paying all the given services, including sign and brand rights.
• Services franchising: system in which the franchisee doesn’t sell any product, but offers invented services, created and tested by the franchisor.
• Store’s layout: the lease of movable and immovable properties that a company offers to a company that obtains the availability in the medium and long term, usually with the promise or possibility of selling it in his favor at the end of the contract .
• Sell in: whole of action made by the franchisor in order to provide the franchisees with the products.
• Sell out: selling of the products to final customers by franchisees.
• Stock: assortment and availability of goods in a shop or warehouse.
• Target: the potential consumers of a specific good or service at whom the advertising campaign is aimed.
• Training: the transfer of specific knowledge related to the formula through courses or sessions made directly in classroom or through computer/multimedia instruments.
• Turnover: the total of the made sales, excluding VAT, resulting from the register of charges.
• Visual merchandising: creating visual displays and arranging merchandise assortments within a store to improve the layout and to draw the attention of the customer.