Term
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Definition
| A marketing system involving a legal agreement, whereby the franchisee conducts business according to terms specified by the franchisor. |
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Term
Franchisor
(lends his trademark or trade name and a business system) |
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Definition
| The party in a franchise contract that specifies the methods to be followed and the terms to be met by the other party. |
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Term
Franchisee
(pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system) |
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Definition
| An entrepreneur whose power is limited by a contractual relationship with a franchisor. |
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Term
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Definition
| The legal document between franchisor and franchisee. |
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Term
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Definition
| The privileges conveyed in a franchise contract. |
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Term
| Product and Trade Name Franchising |
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Definition
| A franchise agreement granting the right to use a widely recognized product or name. |
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Term
| Business Format Franchising |
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Definition
| A franchise arrangement whereby the franchisee obtains an entire marketing and management system geared to entrepreneurs. |
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Term
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Definition
| An independent firm or individual acting as a sales agent with the responsibility of finding new franchisees within a specified territory. |
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Term
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Definition
| Ownership by a single franchisee of more than one franchise from the same company. |
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Term
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Definition
| Individuals or firms that obtain the legal right to open several franchised outlets in a given area. |
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Term
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Definition
| The operation of a retail franchise within the physical facilities of a host store. |
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Term
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Definition
| The operation of several franchise organizations within a single corporate structure. |
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Term
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Definition
| Bringing two franchise brands together under one roof. |
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Term
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Definition
| Actions by franchisors to void the contracts of franchisees in order to sell the franchise to someone else and collect an additional fee. |
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Term
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Definition
| The franchisor’s selling of another franchise location within the market area of an existing franchisee. |
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Term
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Definition
| A detailed statement provided to a prospective franchisee, containing such information as the franchisor’s finances, experience, size, and involvement in litigation. |
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Term
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Definition
| A rule that prescribes that the franchisor must disclose certain information to prospective franchisees. |
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Term
Franchise Disclosure Document
(FDD) |
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Definition
| A document that provides the accepted format for satisfying the franchise disclosure requirements of the FTC. |
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Term
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Definition
| Specialized brokers that bring together buyers and sellers of business. |
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Term
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Definition
| The exercise of reasonable care in the evaluation of a business opportunity. |
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Term
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Definition
| A group of people bound by a shared history and a commitment to share a future together, while supporting the development and well-being of individual members. |
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Term
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Definition
| An organization in which either the individuals who established or acquired the firm, or their descendants, significantly influence the strategic decisions and life course of the firm. |
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Term
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Definition
| Patterns of behaviors and beliefs that characterize a particular firm. |
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Term
| Obligation-Based Commitment |
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Definition
| Commitment that results from a sense of duty or expectation. |
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Term
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Definition
| Commitment based on an individual’s self-doubt and belief that he or she lacks career options outside the current business. |
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Term
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Definition
| Commitment based on a belief in the purpose of a business and a desire to contribute to it. |
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Term
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Definition
| Oneness of mind, feeling, and action, as among a number of persons. |
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Term
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Definition
| Commitment based on the belief that the opportunity for gain from joining a business is too great to pass up. |
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Term
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Definition
| Husband and wife teams who own and manage businesses. |
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Term
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Definition
| A gathering of family members, usually at a remote location, to discuss family business matters. |
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Term
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Definition
| An organized group of family members who gather periodically to discuss family-related business issues. |
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Term
| Family Business Constitution |
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Definition
| A statement of principles intended to guide a family firm through times of crisis and change. |
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Term
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Definition
| An extension of the constitution incorporating additional agreements. |
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Term
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Definition
| Phases in the process of transferring leadership of family business from parent to child. |
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Term
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Definition
| Passing ownership of a family business to the next generation. |
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Term
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Definition
| The expansion of international business, encouraged by converging market preferences, falling trade barriers, and the integration of national economies. |
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Term
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Definition
| Small companies launched with cross-border business activities in mind. |
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Term
| Experience Curve Efficiencies |
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Definition
| Per-unit savings gained from the repeated production of the same good. |
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Term
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Definition
| Insights, gained from experience, that lead to improved work performance. |
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Term
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Definition
| Efficiencies that result from expansion of production. |
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Term
| International Outsourcing |
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Definition
| A strategy that involves accessing foreign labor through contracts with independent providers. |
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Term
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Definition
| A strategy that involves relocating operations abroad. |
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Term
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Definition
| Selling products produced in the home country to customers in another country. |
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Term
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Definition
| Selling goods produced in another country to buyers in the home country. |
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Term
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Definition
| Allowing a company in another country to purchase the rights to manufacture and sell a company’s products in international markets. |
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Term
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Definition
| The company buying licensing rights. |
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Term
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Definition
| The company selling license rights. |
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Term
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Definition
| Fees paid by the licensee to the licensor for each unit produced under a licensing contract. |
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Term
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Definition
| The unauthorized use of intellectual property. |
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Term
| International Franchising |
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Definition
| Selling a standard package of products, systems, and management services to a company in another country. |
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Term
| International Strategic Alliance |
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Definition
| A combination of efforts and/or assets of companies in different countries for the sake of pooling resources and sharing the risks of an enterprise. |
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Term
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Definition
| The purchase by a business in one country of a company located in another country. |
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Term
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Definition
| A wholly owned subsidiary formed from scratch in another country. |
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Term
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Definition
| The potential for political forces in a country to negatively affect the performance of businesses operating within its borders. |
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Term
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Definition
| The probability that a government will mismanage its economy in ways that hinder the performance of firms operating there. |
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Term
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Definition
| The value of one country’s currency relative to that of another country. |
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Term
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Definition
| A trip organized to help small business owners meet with potential buyers abroad and learn about doing business there. |
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Term
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Definition
| An agency that distributes a company’s products on a contract basis to customers in another country. |
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Term
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Definition
| An agreement issued by a bank to honor a draft or other demand for payment when specified conditions are met. |
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Term
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Definition
| A document indicating that a product has been shipped and the title to that product has been transferred. |
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Term
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Definition
| A purchase heavily financed with debt, where the future cash flow of the target company is expected to be sufficient to meet debt repayments. |
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Term
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Definition
| A leveraged buyout involving the purchase of a company with the intent of selling off its assets. |
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Term
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Definition
| A leveraged buyout involving the purchase of a group of similar companies with the intent of making the firms into one larger company. |
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Term
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Definition
| A leveraged buyout in which the firm’s top managers become significant shareholders in the acquired firm. |
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Term
Employee Stock Ownership
(ESOP) |
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Definition
| A method by which a firm is sold either in part or in total to its employees. |
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Term
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Definition
| An employee stock ownership plan that is financed with borrowed money. |
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Term
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Definition
| Financing in which the seller accepts a note from a buyer in lieu of cash in partial payment for a business. |
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Term
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Definition
| Taxation of income that occurs twice, first as corporate earnings and then as stockholder dividends. |
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Term
Initial Public Offering
(IPO) |
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Definition
| The first sale of a company’s stock to the public. |
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Term
| Opportunity Cost of Funds |
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Definition
| The rate of return that could be earned on another investment of similar risk. |
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