A franchise is a business model where an individual or group (the franchisee) is granted the right to use the branding, products, and services of an established business (the franchisor) in exchange for payment of fees or royalties. It is a contractual arrangement that allows the franchisee to operate their own business under the established brand and business system of the franchisor.
Franchising is a popular method for expanding a successful business because it allows the franchisor to grow without bearing the full cost and risks associated with opening and operating new locations. The franchisee benefits from the support and expertise of an established brand, a proven business model, and ongoing training and support from the franchisor.
There are various types of franchises, including fast-food chains, retail stores, service-based businesses, and more. Franchise agreements typically outline the terms and conditions of the relationship, including the initial investment required, ongoing fees, operational guidelines, and the rights and responsibilities of both parties.
Franchising has become a widespread business model worldwide, and it offers entrepreneurs an opportunity to own and operate a business with a higher chance of success compared to starting an independent venture from scratch. However, potential franchisees should carefully review the franchise agreement, conduct due diligence on the franchisor's track record, and thoroughly understand the financial obligations before committing to a franchise opportunity.