Franchise Definition: What Is A Franchise?

I’m going to assume you’re here because you want to know the franchise definition. In other words, you want to know this:”What is a franchise?”

Well, I’m glad you asked, because a lot of people who are interested in franchising don’t know what a franchise business is.

In fact, most people, when asked, will answer the question the question with: “Well, Subway® is a franchise. And so is McDonald’s.”

And while both answers are true, they don’t define what a franchise is-or does.

With this in mind, I’d like to provide you with the answer.
 

Franchise Definition: What Is A Franchise?

I’m quite confident that if I asked 5 people for their own definition of a franchise, I’d get 5 different answers. But that’s okay. You don’t know what you don’t know.

That said, I feel that knowledge is power. In other words, if you’re seriously thinking of becoming the owner of a franchise business someday, you should need to learn as much as you can about the franchise business model, and how it works.

That’s because these days, it’s way too risky to go out and buy a franchise just because it’s “hot,” or because you’ve, “always wanted to own a restaurant.”

So, without further ado, here’s the real definition of a franchise business. (Two franchise definitions, actually.)

Here’s my non-legal definition of a franchise; 
“An arrangement in which the entrepreneur (the franchisor) who has invented a business and its model, who is looking to replicate it, partners with people who would like an opportunity to own their own business and receive detailed techniques in running it, while building equity for themselves and their families. The franchisor’s own money is invested up front, while company growth is leveraged by using other people’s (the franchisees) money.”
 
Now, here’s a the textbook-style franchise definition;

“A franchise arrangement typically involves the granting by one party (the franchisor) to another party (the franchisee) the right to carry on a particular name or trade mark, according to an identified system.
Franchises are usually located within a territory or at one specific location, for an agreed upon term. The franchisee is granted a franchise license to use the franchise company’s trademarks, systems, signage, software, and other proprietary tools and systems in accordance with the guidelines set forth in the franchise contract.”

Finally, here’s how the Federal Trade Commission (FTC) defines a franchise.

The FTC Rule defines a franchise as “Any continuing commercial relationship or arrangement in which the terms of the offer or contract specify, or the franchisor promises or represents, orally or in writing.”
And…

1. The franchisee will have the right to operate a business that is identified or associated with the franchisor’s trademark or to offer, sell or distribute goods, services or commodities that are identified or associated with the franchisor’s trademarks

2. The franchisor will exert or has the authority to exert a significant degree of control over the franchisee’s method of operation, or provide significant assistance in the franchisee’s method of operation;

3. As a condition of obtaining or commencing operations of the franchise, the franchisee makes a required payment or commits to make a required payment to the franchisor or its affiliate.
Read more at Lexology.
 

Franchising Defined: Now What?

Now you have the definition of a franchise, what are you going to do with it? How are you planning to leverage the business systems, support and branding you get when you own a franchise?

Are you going to start searching for a franchise opportunity that may make sense for you?

Or

If you’ve already been searching-and you feel that you’ve found one or two good franchise business opportunities, have you begun doing your research?

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A gentle tip from The Franchise King®:
Do not buy a franchise until you know EXACTLY how to do thorough research.
Learn how here

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Or

Are you just curious?

Maybe you’re in a miserable job situation, and you’re trying to decide if you should:

A. Look for another job in the same field

B. Look for a new career

C. Start a business

D. Buy a franchise

E. Avoid the reality of your situation-and just hang out online-watching videos.

Or

Maybe you’re here because you want to…

Learn Exactly How To Buy A Profitable Franchise 

So you can take control of your life-once and for all.

And work for YOU.