Franchisor definition and meaning

Franchisor is one who grants a franchise. That's the short version.

Let's expand on that.

A franchisor is a person or company that grants the right to operate a business to a franchisee via a franchise agreement. This may include using the brand name, trademark, intellectual property, trade secrets, and business model, which provides tested systems and processes.

The franchisor owns the overall business model. 

Typically, the franchisor started as an entrepreneur solving a problem for the marketplace, be it a service or product. 

Once established products and /or services, systems, processes, and marketing plans have been tested and proven for the original business model; the entrepreneur may decide the fastest way to scale the business is through franchising. The FTC regulates the franchise process – Federal Trade Commission.

Franchising paves the path to growing the business to multiple locations locally, regionally, nationally, or internationally. 

What is a franchisee? 

The franchisee owns a unit(s) as part of a franchise system. The franchisee does not need to be an entrepreneur to invest in a franchise. 

The franchisor typically provides training, operational manuals, marketing support, staffing, site selection, lease negotiations, etc., and ongoing education and guidance to new franchisees of varied backgrounds (teachers, corporate professionals, skilled professionals, Drs, etc.)

What is a franchise agreement?

After a franchise consultant matches the franchise candidate to the franchisor and a franchise is awarded, the two parties enter into a franchise agreement. 

That agreement outlines the rights and obligations of both parties. The franchise agreement typically covers fees, territory, intellectual property usage, training, support, and other essential aspects of the franchise relationship.

Franchisor typically collects fees and royalties as part of that agreement. That may include the initial franchise fee, ongoing royalties, marketing ad fund, technology, support services, etc.

Throughout the franchisee/franchisor relationship, the franchisor's role is to protect the brand, assure quality control (service and/or product), and continually innovate the business through technology, market trends, adjusting to market shifts, etc. 

The franchise agreement helps assure franchisors and independently-owned franchises (franchisees) are on the same page to ensure mutual success. 

What is the franchise & freedom framework?

Just as reputable franchises use systems and processes to help assure mutual success, the franchise & freedom framework is used to effectively and efficiently match franchise candidates with franchisors.

This system helps eliminate the guesswork for franchise candidates and franchisors, leading to better franchise matches for both parties.