VR Business Brokers/Mergers & Acquisitions

Definition: The total amount necessary to begin operation of the franchise

What you need to know: The initial investment includes the franchise fee, along with other startup expenses such as real estate, equipment, supplies, business licenses, and working capital. This is outlined in a chart in Item 7 of the FDD, showing a range of possible costs from low to high.

Definition: The minimum liquid capital you must have available in order to qualify to become a franchisee of this company.

Definition: The length of time your franchise agreement will last.

What you need to know: Franchise terms are typically anywhere from 5 to 20 years in length, but are sometimes instead dependent on factors such as the term of your lease. Once your term is up, you may have the option to renew your agreement, typically for a smaller fee than the original franchise fee.

Definition: The business can be run from your home and/or a vehicle, and it is not necessary to have a retail facility, office space, or warehouse.

Definition: An exclusive territory is a fixed area in which you are given the right to operate and in which no other units of the same franchise may be opened.

What you need to know: Territory size may be based on factors such as radius, population size, zip codes, and more. Details can be found in Item 12 of the FDD.