A franchise is a contractual partnership between a franchise company (franchisor) (a manufacturer, wholesaler, or service organization) and independent business owners (franchisees). Franchisees purchase the right to own and operate one or more units in a franchise system.
A franchise provides the franchisee with access to an established brand, operating system, and training process, while the franchisor receives revenue from fees and control over standards. It is a contractual vertical marketing system that combines the power of centralization with the power of local ownership.
