Franchise opening glossary

A

Asking rent

The rent a landlord asks for a space. The rent a tenant finally signs can be different.

B

Base rent

The per-square-foot rent before the tenant's share of taxes, insurance and common area costs are added on an NNN lease.

Brand fund

A fund franchisees pay into for system-wide advertising. The FDD describes how it is collected and used (Item 11).

Build-to-suit

A deal where a landlord or developer builds a new building to a tenant's specifications and then leases it to the tenant.

C

CAM (common area maintenance)

A tenant's share of the cost to maintain shared parts of a center, such as parking lots, landscaping and lighting. Ask for an estimate per square foot in writing.

Certificate of occupancy

A document from the building department that says a space may be used for its intended purpose. A buildout is normally finished only after it is issued.

Co-tenancy clause

A lease term that ties the tenant's rent or rights to other tenants, such as an anchor, staying open in the center.

Cold shell, warm shell and vanilla shell

Stages in which a landlord delivers a space. The words are used differently in different markets, so ask what is already built, such as restrooms, HVAC and utilities, and put it in the lease.

D

Drive-thru stacking

The number of cars the drive-thru lane can hold without backing into parking or the road.

DSCR (debt service coverage ratio)

A lender's measure of whether a business earns enough to pay its debt: income available for debt payments divided by the debt payments.

E

Endcap

A unit at the end of a retail building. It usually has windows on two sides and more visibility than an inline unit.

Exclusive use clause

A lease term that stops a landlord from leasing other space in the center to a competing use.

F

FDD (Franchise Disclosure Document)

The disclosure document a franchisor must give a buyer at least 14 calendar days before the buyer signs a binding agreement or pays. It has 23 items under the FTC's Franchise Rule. Franchise documents FAQ →

Florida Building Code

The statewide building code. The 9th Edition (2026) takes effect on Dec 31, 2026. Check your code edition →

Franchise fee (initial fee)

The up-front fee paid to the franchisor to join the system. FDD Item 5 lists initial fees and when they are refundable.

G

General contractor (GC)

The licensed contractor who prices and manages a buildout and hires the trades. Compare contractors →

Grease interceptor (grease trap)

A device that catches fats, oils and grease before kitchen wastewater leaves a restaurant. Whether one is required, and its size, depends on local rules.

Gross leasable area (GLA)

The floor area in a center that can be leased to tenants.

H

Hood (exhaust hood)

The ventilation hood over cooking equipment. A second-generation restaurant space may already have one, and who owns it should be clear in the lease.

I

Inline unit

A unit between other units in a retail building.

Item 19 (financial performance representations)

The part of an FDD where a franchisor may give information about the financial performance of its outlets. A franchisor is not required to give any. What if Item 19 is blank? →

Item 7 (estimated initial investment)

The FDD table of expected start-up costs as a low-to-high range. It includes fees, equipment, construction and leasehold improvements, deposits, and additional funds for the first months. Franchise documents FAQ →

L

LOI (letter of intent)

A short outline of the main lease terms, usually not binding, that both sides agree on before a lawyer drafts the lease.

N

Net absorption

The change in occupied space over a period. It is positive when more space was occupied than vacated and negative when the reverse happened.

NNN (triple net) lease

A lease where the tenant pays base rent plus its share of property taxes, insurance and common area maintenance.

P

Permit clock

Florida law gives a local government 60 business days to approve or deny a complete application for a nonresidential building under 25,000 SF (Fla. Stat. §553.792). See your permit clock →

Permit expediter

A professional who prepares and tracks permit applications with the building department.

Personal guaranty

An individual's promise to cover the tenant's lease obligations if the business cannot.

Protected territory

An area where the franchisor agrees not to place another unit of the brand. FDD Item 12 says whether you get an exclusive territory. Territory in an FDD →

R

Royalty

An ongoing fee paid to the franchisor, often a percentage of sales. FDD Item 6 lists royalties and other ongoing fees.

S

SBA 504 loan

An SBA-backed loan program that can fund land, buildings, new construction and renovation of property the business will occupy. It cannot fund working capital. Fund your build →

SBA 7(a) loan

The SBA's main loan program for small businesses. ClearBuild's Fund your build page matches lenders to a project using public SBA loan data. Fund your build →

Second-generation space

Space that was used by a similar business before, so some improvements remain. In restaurants this can mean a hood, grease interceptor and kitchen plumbing.

Site Support Package

ClearBuild's printable, source-cited document for a lender. It is not a formal trade-area study. Site Support Package →

T

Tenant improvements (TI)

The work a tenant does to make a space ready for its business, also called the buildout.

TI allowance (tenant improvement allowance)

Money or work a landlord contributes toward a tenant's buildout. The lease says how much, when it is paid and what it covers.

Trade area

The area a location draws most of its customers from.

V

Vacancy rate

The share of space that is empty and available, as the reporting firm defines it. County figures mix every kind of retail space.

Z

Zone Report

ClearBuild's six-step guided path, from choosing a brand to a printable Site Support Package. Start your Zone Report →

Definitions describe how terms are generally used and are not legal advice. Your lease and your FDD control. See the FAQ for more.