What is a Franchise?

Franchising is a huge and growing part of the nation's economy. More than 300,000 franchised small businesses operating in the United States account for an estimated $1 trillion worth of income each year and provide jobs for some eight million Americans.


A franchise business is a method a company uses to distribute its products or services through retail outlets owned by independent, third party operators. The independent operator does business using the marketing methods, trademarked goods and services and the "goodwill" and name recognition developed by the company. In exchange, the independent operator pays an initial fee and royalties to the owner of the franchise.


The company that grants the independent operator the right to distribute its trademarks, products, or techniques is known as the franchisor. The independent, third party business person distributing the franchisor's products or services through retail or service outlets is called the franchisee.

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