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Franchising (from the French for free) is a method of doing business wherein a franchisor licenses trademarks and methods of doing business to a franchisee in exchange for a recurring payment. A franchise typically enables the investor or franchisee, to operate a business. By paying a franchise fee, which may cost several thousand dollars, you are given a format or system developed by the company or franchisor, the right to use the franchisor's name for a limited time, and assistance. For example, the franchisor may help you find a location for your outlet; provide initial training and an operating manual; and advise you on management, marketing, or personnel. Some franchisors offer ongoing support such as monthly newsletters, a toll free 800 telephone number for technical assistance, and periodic workshops or seminars. While buying a franchise may reduce your investment risk by enabling you to associate with an established company, it can be costly. You also may be required to relinquish significant control over your business, while taking on contractual obligations with the franchisor.

See also

• Smallbusiness.com Guide: Buying a Franchise

SmallBusiness.com Glossary

External links

• American Franchisee Association
• International Franchise Association