A franchise is an investment in which you pay another business for the right to use its business model and products. A franchisor is the party granting the right, and the franchisee is the party buying the right. Essentially, the franchisor acts as a parent, guiding the franchisee through start-up procedures and providing some degree of operations and advertising support.
Relationship between franchisors and franchisees
The relationship between franchisors and franchisees has often been termed a "commercial marriage". In many ways this is true, though the difference is that in the franchise relationship there must by definition be a "senior partner" - the franchisor. Also, the franchise agreement defines the entire basis of the relationship up front, so that both parties know their rights and obligations to the relationship.
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