Overview
Franchising is a business practice where a company licenses its business model to another company. It can involve the franchisor licensing some or part of its knowhow, procedures, intellectual property and other rights to sell its branded products and services to a franchisee. In return, the franchisee pays certain fees and agrees to comply with certain obligations, typically set out in a franchise agreement. For the franchisor, use of a franchise system is an alternative business growth strategy, compared to expansion through corporate owned outlets or "chain stores". Adopting a franchise system is a business growth strategy that minimizes the franchisor's capital investment and liability risk.