A Franchise – Explained + Examples

A franchise is a type of business arrangement where an individual or company (known as the “franchisee”) is granted the right to use the name, products, and business model of an established company (known as the “franchisor”) in exchange for payment of fees and royalties.

In a franchise agreement, the franchisor typically provides the franchisee with a range of services and support, such as training, marketing, and ongoing business advice. The franchisee is usually required to follow certain rules and guidelines set by the franchisor, such as using specific suppliers, adhering to operational procedures, and maintaining certain standards of quality.

Franchises can take many forms, from fast-food restaurants to retail stores to service-based businesses such as cleaning or home repair. Franchises are often marketed to individuals who want to start their own business but may lack the experience or resources to do so independently.

One of the main advantages of franchising is that it allows the franchisee to benefit from the established brand recognition and customer base of the franchisor, which can help reduce the risk of failure in a new business venture. Additionally, the franchisor’s support and resources can help the franchisee to overcome obstacles and grow their business.

However, there are also potential drawbacks to franchising, such as the upfront costs and ongoing fees that the franchisee must pay to the franchisor, as well as the limitations on the franchisee’s ability to make independent decisions and run the business as they see fit.

Overall, franchising can be a viable option for individuals who want to start their own business while benefiting from the experience and support of an established brand and business model.

Some examples of popular franchises and their business model:

1. McDonald’s: McDonald’s is a fast-food restaurant franchise that sells burgers, fries, and other fast food items. McDonald’s provides franchisees with a well-known brand, a proven business model, and extensive training and support, while the franchisees operate their own individual restaurants and pay a percentage of sales to the franchisor in exchange for the use of the brand.
2. 7-Eleven: 7-Eleven is a convenience store franchise that offers snacks, beverages, and other convenience items. 7-Eleven provides franchisees with a recognizable brand, marketing and advertising support, and assistance with store layout and design, while the franchisees operate their own stores and pay a percentage of sales to the franchisor.
3. Jani-King: Jani-King is a commercial cleaning franchise that provides cleaning services to businesses and organizations. Jani-King provides franchisees with training, equipment, and marketing support, while the franchisees operate their own cleaning businesses and pay a percentage of sales to the franchisor.
4. Anytime Fitness: Anytime Fitness is a gym franchise that operates 24/7 and offers a range of fitness equipment and classes. Anytime Fitness provides franchisees with a well-known brand, a proven business model, and extensive training and support, while the franchisees operate their own gyms and pay a percentage of sales to the franchisor.
5. Subway: Subway is a sandwich shop franchise that allows customers to create their own sandwiches using a variety of ingredients. Subway provides franchisees with a well-known brand, a proven business model, and extensive training and support, while the franchisees operate their own individual restaurants and pay a percentage of sales to the franchisor in exchange for the use of the brand.