A franchise is a business model and a contractual relationship between two parties: the franchisor and the franchisee. The franchisor owns the rights to a brand, product or proven business system. On the other hand, the franchisee acquires the right to use these rights under certain conditions.
In this model, the franchisor provides the franchisees with a recognized brand, standardized operating procedures, initial training, ongoing support and sometimes access to central resources such as marketing and wholesale purchase. In return, the franchisee pays upfront fees and ongoing royalties which may include a percentage of the revenues or profits from the operation.
This model allows the franchisee to benefit from the experience, reputation and support of a large brand while maintaining entrepreneurial independence. It enables them to launch their business with reduced risk based on a proven business model. For the franchisor, it is an efficient method to expand their network and geographical reach without bearing the direct development costs.
Franchise models are found in many industries, such as fast food, hospitality, retail, and services. This system is regulated by specific laws in many countries to protect both parties and ensure fair practices. Franchising can be a growth lever for companies and an attractive business opportunity for entrepreneurs looking to start their ventures.