Franchising is a business model that enables an established business (the franchisor) allows an independent business owner (the franchisee) to use the franchisors brand, trademarks, proprietary systems to produce a product or service.
It is a very popular business model because it provides entrepreneurs the opportunity to participate in an existing, successful business with a proven track record, training techniques, established supply chains, a marketing program and ongoing support, dramatically reducing the risk often associated with starting a new business from scratch.
At its core a franchise is a relationship between a franchisor and a franchisee. That relationship is governed by a legal document known as the franchise agreement. A franchise agreement establishes the ground rules for running a successful operation as a unit of the franchisor’s network.
A typical franchise agreement gives the franchisee the right to establish and operate one or more franchised locations or outlets.