Franchising is a method of distributing products or
services. At least two levels of people are involved in the franchise
system:
The franchisor, who lends his trademark or
trade name and a business system; and the franchisee,
who pays a royalty and often an initial fee for the right to
do business under the franchisor's name and system.
Technically, the contract binding the two parties is the franchise, but that
term is often used to mean the actual business that the franchisee operates.
The Franchise Chain :Imagine a store owned by an individual
with a particular concept. If the business is successful, the owner may develop
a second or third store and hire employees for the day-to-day operations.
At that point, if the entrepreneur still wants to expand but prefers not to operate
additional stores himself or herself, he or she may decide to "franchise" the
store name and business system to an independent business person a franchisee.
In return, the entrepreneur may ask for an initial fee and/or a continuing royalty
payment based on a percentage of that franchisee's sales. The business is now
franchised.
Franchise
