How does franchising work?

Franchising occurs when a business (the franchisor) expands nationally or internationally by granting a person or company (called the franchisee) the right to operate a copy of the franchisor’s business in another geographic area.

The right will usually include the ability to use the name, the business system and the know-how of the franchisor. The franchisee pays to set up the business in their area and is the owner of their own business. They receive their income from successfully marketing a desirable product or service under a recognised brand name.