Franchising 101: What is a Franchise?

A franchise is a business that is owned and operated by an individual (franchisee) but that is overseen by a larger company (the franchisor). In a nutshell, a franchisee purchases a license and the rights to use the franchisor’s proven business model and systems – such as their branding, operations strategies, pricing and marketing techniques. As a franchisee, you are also buying the rights and access to a brand, which includes the company’s trademarked materials including logos, slogans, and signage. In exchange for acquiring all the rights to use the franchise’s model, the franchisee pays the franchisor an initial start-up fee and annual licensing fees (which can vary greatly depending on the franchise and industry).

Franchising is an attractive opportunity for those who are seeking out entrepreneurial opportunities, but do not want the burden of taking on the first steps of starting a business from scratch. When opening a franchise, the franchisee is provided with a plan and a guide for the process in its entirety. A major advantage of purchasing a franchise is the support that is provided by the franchisor. When entering the world of franchising, you are immediately surrounded by other likeminded people who are working off the same business plan in other markets.

One key differentiator when comparing starting a business and buying a franchise is that you have a team behind you and other franchisees to lean on in your franchise system. With Franchising, business owners in the system can take advantage of ideas and learnings from the franchisor gathered over years of running the business. Franchisees can see the history of what has contributed growth in the business model and what has failed through the experiences of other franchisees. The ability to share experiences within a franchise community allows current and future franchisees to succeed together.

Franchising is often viewed at as a team effort. A franchisor plans to have every one of the franchisees operating at the best of their ability. When there is a team of people working under one brand name, all involved are responsible for upholding the brand name to the highest standard. This is a built-in promise that serves as a support system for franchisees throughout every step of the journey. Franchising can be thought of as team entrepreneurship and is a secure way to start a business knowing you have a team of others working alongside of you with similar end goal in mind.