Course Content
Essential Business Terminology and Legal Fundamentals
About Lesson


A franchise is a business model where an entrepreneur, known as a franchisee, purchases the rights to operate a business using the established brand, products, and systems of an existing successful company, known as the franchisor.

A franchise is a legal and commercial relationship between the owner of a trademark, brand, or business model (franchisor) and an individual or group (franchisee) who is authorized to operate a business using the franchisor’s brand, systems, and support.

Real-world example:

McDonald’s is a well-known example of a franchise. Franchisees pay fees to McDonald’s Corporation to operate a restaurant using the McDonald’s brand, menu, and operating systems. The franchisee benefits from the established brand recognition, national marketing campaigns, and ongoing support from the franchisor.

In this case, the franchisee gains access to a proven business model, established brand equity, and support from the franchisor. The franchisor expands its business through the efforts of franchisees who invest in and operate their own outlets.

How-to guide:

Research potential franchises: Explore different franchise opportunities available in various industries to find a business model that aligns with your interests, skills, and financial resources.

Evaluate franchise offerings: Assess the reputation, profitability, and support provided by different franchisors, including training, marketing assistance, and ongoing guidance.

Review the franchise agreement: Examine the terms and conditions of the franchise agreement, including franchise fees, royalties, territory restrictions, and renewal terms.

Secure financing: Determine the financial requirements for starting a franchise, including initial investment costs, working capital, and potential financing options.

Open and operate the franchise: Once you have completed the necessary preparations and signed the franchise agreement, follow the franchisor’s guidelines and use their systems to start and run your business.


Franchising offers individuals the opportunity to become business owners with a higher chance of success compared to starting a business from scratch. It allows entrepreneurs to benefit from the established systems, marketing strategies, and brand recognition of an established company while still maintaining a certain level of independence and ownership.