Simply, franchising is a method of business
by which you, the franchisor, who has developed a successful
product or service and a proven format of business operation,
grants your franchisee (an independent business person) by
contract agreement the right to sell goods or services under
your system. You permit the franchisee to use your trademark,
name, advertising, and know-how.
You help your franchisee establish the business on a local
level and provide continuing support to help him successfully
market your product or service. For this management guidance
and assistance, your franchisee normally pays you a franchise
fee and a continuing royalty based on the sales of the operation.
You benefit because you pool your resources (market talent,
management expertise, and experience) with the resources of
your franchisees (local involvement and exposure, aggressiveness
and education, and local capital). You raise money and expand
your business while your franchisees fulfill their need for
independence with a minimum of risk and involvement and a
maximum opportunity for success.
Thus, you profit while helping others