According to International Franchise Association:
“Franchising is a method of distributing products or services. At least two levels of people are involved in a franchise system: (1) the franchisor, who lends his trademark or trade name and a business system; and (2) the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. Technically, the contract binding the two parties is the “franchise,” but that term is often used to mean the actual business that the franchisee operates”.
Buying a franchise offers huge advantages to the entrepreneur – Perhaps the most significant is starting a business with a proven system of operation and recognizable brand. New franchisees can avoid a lot of the mistakes startup entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error.Franchise can be a fresh new start for someone trying to set foot at the door of the business world or for someone looking for the second source of income.
Starting a franchise has its risks and rewards. The Franchisee will have a great deal of resources to help running the business, including marketing done by the Franchise owner, however it will require time and effort to make the business profitable
In addition, it is important to consider the pros and cons of owning a Franchise.
“Owning a franchise allows you to go into business for yourself, but not by yourself.”
Either way, franchising provides stability and security to new business efforts – an established business model, being a part of regional and national marketing campaigns of the Franchisor, access to customer leads database, and lower costs through group purchasing.