What is a franchise & how does it work?

What Is a Franchise? What is a Franchise? A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.

What is the difference between a franchise and a franchisor?

A franchise is a business whereby the owner licenses its operations—along with its products, branding, and knowledge—in exchange for a franchise fee. The franchisor is the business that grants licenses to franchisees. The Franchise Rule requires franchisors to disclose key operating information to prospective franchisees.

What is a franchise license?

A franchise is a type of license that grants a franchisee access to a franchisor's proprietary business knowledge, processes, and trademarks, thus allowing the franchisee to sell a product or service under the franchisor's business name.