A franchise organization is a contractual vertical marketing system (VMS) in which a channel member, called the franchisor, links several stages of the production-distribution process through a contract. This organization is the most popular form of contractual VMS.
Within a franchise organization, the franchisor provides the system, brand, and know-how, and the franchisees provide the financing and local management. This structure allows the brand to expand rapidly in the market while maintaining quality and service standards throughout the network.
