Franchise

A franchise is a business model where a company (the franchisor) grants the right to another party (the franchisee) to operate a business using the franchisor's brand, trademarks, products, and operational systems.

This agreement typically involves ongoing fees and adherence to specific standards to maintain brand consistency.

Franchises offer entrepreneurs a relatively lower-risk path to business ownership by leveraging an established brand and proven business model, while the franchisor expands its market reach efficiently.

Franchise meaning with examples

• McDonald's is a globally recognized franchise, allowing entrepreneurs to own and operate restaurants under the well-known brand. Franchisees pay royalties and adhere to strict operational standards.
• The restaurant chain, Subway, thrives on its franchise model. Each location is independently owned and operated by a franchisee who benefits from the brand recognition and streamlined systems.
• Many hotels, like Holiday Inn, are run as franchises. This allows rapid expansion into new markets, where individual owners operate hotels under the brand name and standardized service.
• During economic downturns, franchises, especially in the food and beverage industry, are resilient. They offer established brands, proven recipes, and operational models.
• Owning a franchise with a strong brand like UPS offers advantages such as brand recognition and access to existing clients, although operational requirements must be met.