It is important for you to understand franchise terminology. Here are some examples: FRANCHISOR The parent company that grants, for a fee and other considerations, the right to use its name and system of business operations. FRANCHISE AGREEMENT A written contract that grants, for a fee and other considerations, the right to use the Franchisor's name and system of business operations. FRANCHISE FEE An up-front entry fee, payable upon the signing of the contract (franchise agreement) for the right to use the franchisor's name, logo, and business system. Often, the franchise fee is also the consideration paid for initial training, site selection, operations manuals, and other help given by the franchisor before the opening of the business. ROYALTY A continuing payment to the franchisor that is payable weekly throughout the term of the franchise agreement. ADVERTISING FUND Another continuing periodic payment to the franchisor that, like the royalty payment, is a percentage of gross sales. ESTIMATED INITIAL INVESTMENT A detailed listing of all fees and expenses you can expect to incur in starting your franchised business. This listing represents the estimated total dollar amount that you would need to pay or get financing for, including fees paid to the franchisor; estimates for furniture; fixtures and equipment; opening inventory; real-estate costs; insurance; etc. This estimate should include a provision for working capital through the start-up phase. UNIFORM FRANCHISE OFFERING CIRCULAR (UFOC) This is the prospectus prescribed by the FTC which is required by law to be given to a potential franchisee prior to signing the Franchise Agreement. The UFOC contains explicit items of information related to the franchise concept.