What is a franchise?

Business format franchising (the recognised form for franchising used in business) can be explained as the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.

This structure will involve the franchisee going through a recruitment process to ensure that they have the correct attitude, skills and aptitude to professionally and successfully run the franchise business. Only once they have passed this recruitment process will they be invited to pay an initial fee, which will then lead them on to the various aspects of set-up required, such as training for the specifics of the business.

The franchisor, who owns the brand and business model, will continue to work with the franchisee to ensure that the business is being run as it should and that all the correct procedures and quality levels are being maintained. To allow for this quality control, brand development and ongoing business support, the franchisee will pay an ongoing fee to the franchisor. This ensures a sustainable and robust business for the future.