Franchising Defined

What’s a franchise?

A franchise is the license granted by an existing business in order to allow others to replicate their business model. The original business will have enjoyed success and will be available to be copied by others. A franchised business has been tried and tested with a carefully developed brand and an understanding of the market.

What’s a franchisor?

The franchisor owns the business that grants licenses to others. They share their brand, knowledge and expertise. The license they grant is usually specific to a particular geographic territory. In exchange, the franchisor receives a franchise fee and they are likely to charge ongoing management fees for the duration of the license.

What’s a franchisee?

A franchisee enters into a franchise agreement in order to acquire a franchise license. They become part of a franchise family and have the opportunity to replicate a proven business model. A franchisee can expect full guidance and support but their own efforts will play an important part in the success of their franchise.

What’s a franchise agreement?

A franchise agreement is the legal document that outlines the relationship between franchisor and franchisee. The roles and responsibilities that both sides will take will be clearly defined together with time-frames, financial and ongoing obligations. The franchise agreement is legally binding and is designed to protect both sides.

What’s a franchise territory?

A franchise territory is the geographical area assigned to a franchisee to operate their business. It is almost always an exclusive area where no other franchisee from the same brand will work. The size and details of the territory will be defined in the franchise agreement and will be determined by factors such as population demographics.

What’s a franchise manual?

A franchise manual is the business guidebook. The manual will be supported by in-person and/or online training, but it will serve as a written document detailing how to run the business. It will contain best practises, brand guidelines, plans, templates and multiple resources unique to a particular franchise.