A franchise is a business that gives the right to another person or business to sell goods or services using its name. It does this by providing the person or other business with a licence. Buying into a franchise is an alternative to setting up a new business. Instead, individuals can buy into an already successful business.
To become part of a franchise, a new business must pay a fee. In return, it gets to join the franchise and benefit from using its name, products, training, marketing and equipment. Buying into an already established brand can help to reduce the risk of the business failing for the franchisee.
There are some important key terms to remember with franchises: