Andy's Frozen Custard

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: An going fee paid to the franchisor on a regular basis to support advertising or marketing efforts.

What you need to know: This may also be called advertising fee, marketing fee, brand fund fee, and more, but the basic purpose is the same-- to support promotion of the brand systemwide. As with the royalty fee, it is detailed in Item 6 of the FDD, and can be a percentage of weekly or monthly gross sales or a weekly, monthly, or annual 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.