Franchise is an authorization granted by a company (Franchisor) to an individual or group of individuals or a legal entity (Franchisee) that entitles the later to carry out specified activities on the contract using the business expertise of the franchisor and market its products and services under the same brand name, enabling franchisee to run the operation in a specific location and share the returns arising there from.

2. It is a method or model of business wherein, there exists a
continuing relationship in which a franchisor provides a licensed
privilege to the franchisee to do business and offer assistance in
setting up, organizing, training, marketing and managing in return
for a monetary consideration. Franchising is a form of business by
which the franchisor of a product, service or method obtains
distribution through affiliated franchisees.
Franchise is an authorization granted by a company (Franchisor) to
an individual or group of individuals or a legal entity (Franchisee)
that entitles the later to carry out specified activities on the contract
using the business expertise of the franchisor and market its
products and services under the same brand name, enabling
franchisee to run the operation in a specific location and share the
returns arising there from.

3. Franchisor is the company that owns the business, the brand
and all the associated trademarks, trade names and grants
franchise to the franchisees.
Franchisee is an individual or a group of individuals or an entity
that buys into a franchise and receives entitlement to business
from a franchisor.

4. It is a detailed document that reveals all the facts and all the
essential information regarding the franchisor and the
franchise contract. This must have all those details included
that are essential for the potential franchisee to decide on the
investment. Further franchise governing body of the region
will have also recognized the essential information that has to
be included in the document. The information may include
 Trademarks, Copyrights, Patents, Trade-
names And Other Proprietary
Information
 Restriction on goods and services and
on sources of products
 Financial statements and other
information of recent past
 Details of existing franchisees
 All the information as per the law
 Details of Franchisor, associated
ventures and affiliates
 Litigation history
 Details of bankruptcy filed in the past
or present
 Franchise fee, other fees and
expenses
 Estimated initial investment
 Obligations of either parties to the
agreement

5. A Franchise is always restricted to operate with in a
predefined territory in the specified location so as to ensure
that the competition between the franchises under the same
franchisor does not exist. As complimentary to this restriction
each franchise enjoys the benefit of ‘protected
territory’, within which the franchisor will agree not to open
another franchise.
A master franchise has entitlement in addition to what a
franchise is offered. Many a times a franchisor grants rights
of franchising to franchisees. When franchisees buy into a
master franchise, they are also entitled to open their outlets
or sub franchises and gain right over a bigger territory for
this purpose and in such cases franchisee becomes the
master franchisor for the sub franchises.

6. A fixed payment or percentage of revenue that is paid to the
franchisor for continued use of resources and intangible assets
such as good will of the franchisor. It is paid periodically - once
or more number of time depending on predetermined terms.
The above glossary is pertinent only to franchise industry. For more comprehensive
understanding of franchise industry Indian Institute of Hardware and Technology
(IIHT) is creating resources for the information seekers. More details on each of the
above stated terms and their implications at IIHT Technologies are available on
http://www.youtube.com/IIHTTECH. IIHT also develops well researched thesis on
various franchising aspects. For information on IIHT franchises please visit IIHT
Technologies website.

7. Corporate Headquarters
#15,Sri Lakshmi Complex, 4th Floor, St. Marks Road, Bangalore - 560 001. India
Tel: 91 80 6160 4545 e-mail: franchise@iihttechnologies.com
web: www.iihttechnologies.com/