Franchise

Franchising

Definition: A continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration. Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees).

A parent company lets somebody run a business with the parent companies brand; for a small percentage off the profits and a fee, a franchisee would have a level of standards to live up to and the franchise would train them and the employees. A small business would find this beneficial because they can use a very popular brand to try and make there selves money. The parent company would find this beneficial because they are making money without having to pay for a new branch, also the person who owns the franchise has the liability. The down side for the parent company is that it can make them look bad if the franchisee doesn't live up to the companies standards. 

Examples of franchises.