franchisee

A franchisee is an individual or organization that purchases the right to operate a business using the franchisor's brand, business model, and ongoing support. The arrangement is governed by a franchise agreement and typically involves an upfront franchise fee plus ongoing royalties and contributions to a marketing fund. The franchisee gains access to established systems, training, and supplier relationships, but must operate in accordance with the franchisor's standards.

The franchisor licenses use of trademarks, methods, and know-how; provides training, site selection guidance, supply chain, and ongoing support; the franchisee is responsible for day-to-day management, staffing, local marketing, quality control, and regular reporting. Territorial rights may limit competition from other franchisees within a defined area. Compliance with brand standards is mandatory; violations can trigger remedies or termination.

Terms vary by jurisdiction but commonly include a fixed term, options to renew, and conditions under which the agreement can be terminated for cause or for convenience; consequences include closure, non-compete clauses, and the disposition of inventory and equipment. In many countries, disclosure documents are required (e.g., the U.S. Franchise Disclosure Document).

Franchisees operate across industries, particularly fast-food, hospitality, and retail. Benefits include an established brand and tested business model; risks include ongoing fees, dependence on franchisor performance, and market conditions; success often depends on local execution and franchisee–franchisor alignment. Types include single-unit, multi-unit, area developers, and master franchisees.