A franchise is a right, specifically a licence, which a franchisee (=a person or business who buys the franchise right) buys from a company that allows them to sell its goods or services under the company’s name, especially in a particular geographic area. A franchise also generally includes access to the franchisor’s (=a person or business who sells the franchise right) proprietary information (=information that is usually kept secret by a business), trademarks and other intellectual property. Typically, the franchisee acquires the licence by paying the franchisor start-up and annual licensing fees.
The term franchise can also mean a business run under a franchise. Not surprisingly, franchises are a popular way to start a business. Franchisees buy franchises for many reasons, but one of the most important factors is that buying a franchise gives the franchisee access to an established company’s trademark and brand name, which means they do not have to spend as much on marketing.