SPAR: DUTCH FRANCHISE WITH MORE THAN 13 THOUSAND STORES IN 48 COUNTRIES
Increasingly present in business and entrepreneurship schools, the topic of franchising arouses a lot of interest. As the sector grows, so does the production of its own language or the creation of terms that may not be clear to the general public. Here is a list of relevant thematic expressions and their meanings.
1. Franchisor : company that grants the franchise, holds the rights to the brand, method and business processes and selects its franchisees to represent it through the franchise.
2. Franchisee: whoever acquires the franchise, the owner of a franchised unit, who may be an individual or even a legal entity and whose mission is to operate the franchised business.
3. Franchise: is the business unit (establishment) operated and managed by the franchisee.
4. Franchise Fee: amount generally paid when granting the franchise, which refers to the right to be part of the network and access all the know-how developed by the franchisor, as well as use of the brand. It is linked to the start of the business and includes initial guidance and training so that the franchisee can be successful in establishing their unit.
5. Royalty fee: paid at a defined frequency (generally monthly) by the franchisee to the franchisor in return for continued access to know-how, benefits and use of the brand, as well as approved suppliers and support and training programs. Remuneration for services, in general, provided by the franchisor to the franchisee.
6. Marketing Fee: also known as Advertising Fee, it is charged to franchisees to form a fund to be managed by the franchisor (it can even count on the support of franchisees) for use in national, regional or local advertising campaigns.
7. COF – Franchise Offer Circular: very comprehensive legal document that functions as a type of notebook where various mandatory information from the franchisor is defined regarding the rights and obligations of each party. It must be delivered at least 10 days before signing any contract or pre-contract or even paying any system fee.
8. Franchise Agreement: legal document that must be part of the Franchise Offer Circular and that will govern the entire relationship between the franchisor and franchisees, determining all legal and commercial aspects of the business.
The most important point, therefore, is to ask the person negotiating the acquisition of a franchise for clarification if there is not a complete understanding of the term used. The purchase and investment decision is too relevant to not be understood in its entirety.
The franchise business has general commitments commonly applied, however it is important to pay attention to what is defined by the legislation of each country and to the specific contract that you intend to sign, taking the time necessary to analyze all aspects involved and decide accordingly. aware of all responsibilities involved and the prospects of the business.
Source: Text adapted (2024) from RIBEIRO, Adir (Franchise Specialist). Exame Magazine (2012).