What are some of the basic words and definitions associated with Franchising?
- Franchisor
- The company that provides a franchise business to those looking for a business opportunity.
- Franchisee
- The person or people who would like to become business owners within a franchise business.
- Prospective Franchisee
- A person who is exploring a franchise opportunity with a franchisor.
- Franchise Disclosure Document (FDD)
- A comprehensive document for prospective franchisees. It provides many facts and figures about a franchise in a specific format. It is a requirement of the U.S. Federal Trade Commission that prospective franchisees be disclosed with a copy of the FDD prior to purchasing the franchise.
- Discovery
- The due diligence process of learning about a franchise business opportunity in an effort to determine whether it is a good fit.
- Discovery Day
- An event where a franchisor invites prospective franchisees to learn more about their business opportunity. This event is usually held at the corporate headquarters of a franchise business.
- Validation
- A critical step in the discovery process when a prospective franchisee speaks to or meets with franchisees within a franchise system.
- Selection
- The process that a franchisor will require a prospective franchisee to go through in order to be approved for a franchise. This may include completion of an application; a personality/fit assessment; an interview, by phone or in person; and a background, credit or reference check.