franchisors

Franchisors are entities that own a trademarked brand and a proven business model and license these assets to franchisees to operate a business under the franchisor’s name. Through a franchise agreement, the franchisee gains the right to use the brand, operating systems, and ongoing support in exchange for upfront fees, ongoing royalties, and, in some cases, marketing contributions.

Core elements of the franchisor-franchisee relationship include brand standards, operating manuals, and training; a supply chain or procurement framework; and advertising or national marketing contributions. The agreement defines territory or market area, term length, renewal conditions, performance expectations, and termination rights. Franchise fees typically include an initial franchise fee, ongoing royalties based on sales, and contributions to an advertising fund.

Franchisors provide initial training, ongoing education, marketing support, and access to approved suppliers and products. They also perform quality control and brand protection to ensure consistency across locations, and they may conduct audits and require compliance with operational procedures.

Franchisees operate their own businesses but must adhere to the franchisor’s standards, participate in mandatory training, report performance, and renew or extend the agreement when due. Intellectual property rights, such as trademarks and logos, are protected and restricted to licensed use.

The legal and regulatory framework for franchising varies by jurisdiction. In the United States, the Federal Trade Commission’s Franchise Rule requires disclosure of a Franchise Disclosure Document and related information before signing, while other countries have different requirements. Franchisors seek to balance rapid brand expansion with maintaining quality and control across the system.