Franchises can come in many shapes and sizes, and are often structured differently depending on the type of business and the target markets they are pursuing. Fundamentally, a franchise is a business relationship between two entities: the franchisor (parent company) and the franchisee (business owner). The franchisee uses the franchisor’s brand/business name/trademark/systems/processes/etc. that the franchisor provides to the franchisee. In a nutshell, the franchisor provides the franchisee with a “turnkey” business for a fee. The beauty and lure of franchising is that someone else has already worked out the bugs, figured out the systems and processes, and proven the concept to be successful. Therefore, the likelihood of success, while not guaranteed, is greater than going it on your own.
In practice, franchises can take many forms, but they all have the same three elements: common brand, operating assistance or control, and payment of a fee.