Franchising is the practice of using another firm's successful business model. The word 'franchise' is of Anglo-French derivation - from franc - meaning free, and is used both as a noun and as a (transitive) verb.
For the franchisor, the franchise is an alternative to building 'chain
stores' to distribute goods that avoids the investments and liability of a
chain. The franchisor's success depends on the success of the franchisees. The
franchisee is said to have a greater incentive than a direct employee because
he or she has a direct stake in the business.
Essentially, and in terms of distribution, the franchisor
is a supplier who allows an operator, or a franchisee, to use the supplier's
trademark and distribute the supplier's goods. In return, the operator pays the
supplier a fee.
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