Definition Of Franchise And Basic Terms From The Industry

In our everyday business life, more and more people ask themselves and even those around them the question: what is a franchise? The word franchise has increasingly become a common word in our vocabularies. However, we don't use it with the same meaning as venture, opportunity or business. Therefore, the real answer to "what is a franchise" question might come as a surprise to many of us.

In our modern world, a franchise business is now perceived as being the same with a group of fast-food chains spreading across America, with names such as McDonald's, Microsoft, New York Yankees and so on. So for those of us who consider that the answer to the "what is a franchise" question is synonym with these brand names, we should inform them that they're wrong. A franchise is more than fast-food, IT or sports.

A franchise is a business model created by one person or a team of people called franchisor. From this perspective, the answer to "what is a franchise?" should is simple, but also superficial: a franchise is a business managed by a franchisor. Let's detail a bit the franchisor's responsibilities, to get a real grasp of the concept of franchise.

The franchisor grants to you or someone else (called "franchisee") the right to sell his business' goods or services, under a predefined set of terms and conditions. This set is also referred to as a "system". So now the answer to what is a franchise should be similar to the following: a franchise is a business model granted by a franchisor to the franchisee, under a set of rules called "a system".

So now you have it. The answer to the question "what is a franchise?" is as simple as ever, and if you follow the rules specified by the franchisor, your franchise business will undoubtedly be a successful one.