Amortize: Process of systematically and rationally allocating cost of the asset over its expected life.
Balance Sheet: A financial document that states the businesses’ equity, assets and liabilities at a particular time. It illustrates the net worth of the business.
Business Opportunity: Lease or sale of a complete business package including the product, equipment and service that enables the buyer to start-up a business. The buyer typically operates the business independent of the seller.
Business networking: Establishing a relationship that is mutually beneficial with potential customers as well as other businesses.
Business for Sale: An independent business, which is up for sale wherein there the relationship with the seller is discontinued.
Business plan: A document describing a business and its strategies and objectives as well as its financial and market forecast.
Due diligence: The formal investigation of the businesses’ past history and background, which is done to make sure there are no unsavory details that could potentially affect the deal.
Estimated Initial Investment: A comprehensive listing with detailed expenses and fees that are expected to be incurred when buying a franchise.
Franchisee Fee: A one-time fee that is paid by the franchisee for the permission to use the name and logo of the franchisor.
Franchisee: The person who owns and operates the franchise.
Franchise Opportunity: A business wherein a franchisee or independent business owner is given a license to render services or sell the products of a company, who is called a franchisor.
Franchise for Sale: The process of buying an existing franchise. The risk of failure is minimal, which makes it worth the higher initial investment.
Franchisor: The person or company granting the franchise.
Initial Investment: It only indicative of the initial cash that is required to begin operating the franchise. The initial investment may include all start-up expenses including franchisee fees but it does not indicate the total investment.
Marketing Research: The process of collecting, interpreting and analyzing relevant data with regard to the market, competitors and customers of the company, so as to improve marketing decisions.
Non-Compete Clause: A franchise agreement that excludes the franchisee from indulging in any kind of competition with the franchisor upon termination of the contract for any reason.
Royalty: Refers to the percentage of the sales that has to be paid every month to the franchisor.
Small Business Loan: The loan taken by a business person for running or starting-up a small-sized business.
Small Business Opportunities: A business does not have a large number of employees. The employee-limit for a small business varies by industry and country, but is generally less than 100 employees and the annual revenue is less than $5 million. Small businesses are typically sole proprietorships or privately owned partnerships and corporations.
Sole proprietorship: Any enterprise that is operated and owned by an independent owner without any partners or incorporation. All business debts and liabilities are solely the responsibility of the sole proprietor.
Uniform Franchise Offering Circular (UFOC): A rule enacted and enforced by the Federal Trade Commission, which requires that all prospective franchisees get a written prospectus or UFOC from the franchisor. This prospectus typically contains detailed information pertaining to the franchise.
Working capital: Existing assets minus existing liabilities. Building up any new business takes time and most businesses typically operate at a loss in the first few months. Many start-up businesses fail when the start-up working capital is insufficient and takes too long to recover.
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