Franchise

Definition of Franchise

Franchise refers to a business arrangement in which an established company (franchisor) grants an individual or entity (franchisee) the right to operate a duplicate of their proven business model, including trademarks, branding, processes, and support.

In exchange for initial fees and ongoing royalties, the franchisee gains access to a recognized brand, operational guidance, marketing strategies, and often a dedicated customer base.

This allows the franchisee to run their own business while benefiting from the franchisor's expertise, reducing the risks associated with starting from scratch.

What is Franchise?

A franchise is a business structure where a company grants entrepreneurs (franchisees) the ability to replicate their successful business model.

By paying fees and royalties, franchisees gain access to established branding, operational practices, and ongoing support.

This setup enables individuals to run their own businesses while leveraging the franchisor's expertise and reputation.

Franchises span various industries and offer a pathway to entrepreneurship with reduced startup risks.

Types of Franchise

Franchises come in different forms, including product franchises (focusing on selling goods), service franchises (providing specific services), and hybrid franchises (combining products and services).

Additionally, there are single-unit franchises (operating one outlet), multi-unit franchises (managing multiple outlets), and master franchises (sub-franchising in a particular region).

Franchises can range from fast-food chains and retail stores to fitness centers and educational services. The franchisee-franchisor relationship can also be categorized as business-format franchising (replicating an entire business model) and product/trademark franchising (using the franchisor's branding).

What are examples of Franchise?

McDonald's

A prime example of business-format franchising, McDonald's allows franchisees to run fast-food restaurants while adhering to its standardized menu, processes, and branding. This consistency contributes to its global recognition.

Subway

Known for its product franchising approach, Subway franchisees offer sandwiches using the company's recipes and ingredients. Franchisees benefit from established recipes and brand visibility.

7-Eleven

Operating as a retail convenience store franchise, 7-Eleven franchisees stock products following the company's guidelines and capitalize on its recognizable branding.

Planet Fitness

An example of a fitness center franchise, Planet Fitness franchisees offer affordable gym memberships while leveraging the company's marketing strategies and operational guidelines.