A Franchise Business is a legal and commercial relationship between the owner of a trademark, brand, or business model (the franchisor) and an individual or group (the franchisee) who is allowed to operate a branch or replica of that business. In exchange for fees and ongoing royalties, the franchisee gains access to the franchisor’s established brand, business systems, products/services, and operational support. Franchising is a popular way to expand businesses and provides franchisees with a lower-risk method to start a business using a proven model.
Simplify credential management
Tracking employee certifications and licenses doesn't have to be complicated. Expiration Reminder helps you send automated notification and keep your company compliant.
Key Facts
- Structure: A franchisee operates under the franchisor's brand and must follow strict rules outlined in a franchise agreement.
- Fees: Franchisees typically pay an initial franchise fee and ongoing royalties based on revenue.
- Support: Franchisors often provide training, marketing, equipment, and ongoing business support.
- Examples: Common franchise businesses include McDonald’s, Subway, Anytime Fitness, and The UPS Store.
- Regulation: In the U.S., franchising is regulated by the Federal Trade Commission (FTC), which requires a Franchise Disclosure Document (FDD) before signing.
1. What is a franchise business?
A franchise business is a business model where an individual (franchisee) pays to use another company’s brand, system, and support to operate a local unit of the larger business (franchisor).
2. What are the advantages of owning a franchise?
Franchisees benefit from brand recognition, proven business systems, training, marketing support, and typically a faster path to profitability than starting an independent business.
3. What are the costs involved in opening a franchise?
Costs often include an initial franchise fee (ranging from thousands to hundreds of thousands of dollars), royalty payments, marketing fees, and startup costs like equipment and rent.
4. How is a franchise different from a company-owned store?
In a franchise, the business is owned and operated by the franchisee, not the parent company. In contrast, a company-owned store is run directly by the corporation.
5. Can a franchisee run the business however they want?
No. Franchisees must follow the franchisor’s operational guidelines, branding standards, and product/service requirements outlined in the franchise agreement.
Make sure your company is compliant
Say goodbye to outdated spreadsheets and hello to centralized credential management. Avoid fines and late penalties by managing your employee certifications with Expiration Reminder.
.png)
