About franchising

Franchising is a form of cooperation in which one entrepreneur allows another to do business on behalf of his or her own brand. The franchisor shares a well-known brand name and the franchisee “leases” it. Both can be individuals or legal entities.

The franchisee pays a lump sum fee (a one-time entrance fee) and a periodic royalty (a commission in a fixed amount or a percentage of sales). Instead, the franchisor allows the franchisee to use his franchise – a well-known name, business model, and know-how. It helps the franchisee with instructions, technology, a counterparty base, necessary equipment, marketing, and more.

The franchisor can expand its brand into new markets and scale its business, while the franchisee gets a readymade solution instead of starting from scratch.

One of the main benefits of franchising is the time you save. Franchisees don’t have to reinvent the wheel and do their own development. Franchisors are interested in the success of the brand and network expansion, so they provide a lot of support to franchisees. For example, they can help to find facilities and suppliers, organize logistics, provide software and provide staff training.

Franchising allows franchisors to expand their business without the need for large capital investments, and franchisees get the opportunity to do business under a well-known brand name and receive support from an experienced partner.

A franchise is a contract between a company with its own brand and a third party. Under the terms of the agreement, a franchise buyer (franchisee) receives a paid right to open his own business under the guidance of the company – the franchise owner (franchisor), using its name, technology, intellectual property rights and so on.