Franchises are generally known to the public under a well promoted name like MC Donald’s not the name of the individual Franchise owners.

Historically the word franchise meant the granting of a right or privilege to an individual or group. In more recent times it includes business arrangements known as franchises, licenses, dealerships and distributorships.

Franchising may be defines as a business arrangement which allows for the reputation,( good will) innovation, technical know-how and expertise of the innovator (franchisor) to be combined with the energy, industry and investment of another party (franchisee) to conduct the business of providing and selling of goods and services.

For a company wishing to expand to other locations, franchising offers the opportunity to have branch location operated by “dedicated” managers rather than company employees. A franchisee will sell more, service customers better and control cost more tightly than company employee.

The franchise arrangement will usually also require the franchise to protect the Intellectual Property of the franchised System and to operate in accordance with territorial or geographical obligations agreed.

• Is not a business or an industry.
• Is a method of distributing products and service to customers.
• Utilizes a network of local owners (“locally owned and operated”) operating under a share brand.
• Franchisees –Pay the franchisor for the right to do business under the shared brand.Operate under a specified, controlled business method or format.
• Franchisors -Provides significant initial and on –going support.