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Its sells the right to use its name and idea. The franchisee buys this right to sell the franchisor’s goods or services under an existing business model and trademark.
A franchise refers to a contractual arrangement whereby one party (the franchisor) allows another party (the franchisee) to use its trademarks (or tradenames) and other intellectual property, as well as certain business processes and systems. Franchising can include the manufacturing and marketing of a good or service according to the already established franchisor’s criteria. In other words, the franchisor grants the franchisee the right to use its business model, including its brand name, and sell its products and services to customers.