What is the definition of a franchise?
A ‘business format franchise,’ as most of us know it, is a type of franchise that most of us are familiar with. The franchisor grants a franchisee the ability to operate under its brand in this scheme. The Franchise Agreement governs this license, and when executed properly, it provides major benefits to both the franchisor and the franchisee.
The franchisor can grow their business by attracting inward investment from franchisees, who then copy the franchisor’s operations and expand into other markets or territory. Because they are supported within an established system, the franchisee bears less risk – and makes money faster – while the franchisor receives a portion of the profits for sharing that system.