Uploaded May 2026 | Updated September 2026, 2 weeks ago
Franchising is a business arrangement where a franchisor — the brand owner — licenses its business model, brand and products to a franchisee, who runs a local outlet in exchange for an upfront fee and ongoing royalty payments. For many businesses, particularly those offering services, franchising is one of the cheapest and fastest ways to scale an idea.
Classic examples. McDonald's — the world's largest franchise, with tens of thousands of franchised restaurants. Subway, Costa, Domino's, and car dealerships like Kwik Fit are all franchise models.
For the franchisor, franchising delivers rapid expansion with low capital investment. Franchisees put up the money to open each outlet. Royalty income flows back to the franchisor, who focuses on brand, product development and supplier relationships.
For the franchisee, franchising offers a proven business model, instant brand recognition, training and support, and lower risk than starting from scratch. Studies show franchises have higher survival rates than independent businesses.
But there are real downsides. Franchisees have little control — prices, products and branding are often dictated. Ongoing royalties eat into profits. And a scandal at one outlet can damage the whole brand.
Franchising is a business arrangement where a franchisor — the brand owner — licenses its business model, brand and products to a franchisee, who runs a local outlet in exchange for an upfront fee and ongoing royalty payments. For many businesses, particularly those offering services, franchising is one of the cheapest and fastest ways to scale an idea.
Classic examples. McDonald's — the world's largest franchise, with tens of thousands of franchised restaurants. Subway, Costa, Domino's, and car dealerships like Kwik Fit are all franchise models.
For the franchisor, franchising delivers rapid expansion with low capital investment. Franchisees put up the money to open each outlet. Royalty income flows back to the franchisor, who focuses on brand, product development and supplier relationships.
For the franchisee, franchising offers a proven business model, instant brand recognition, training and support, and lower risk than starting from scratch. Studies show franchises have higher survival rates than independent businesses.
But there are real downsides. Franchisees have little control — prices, products and branding are often dictated. Ongoing royalties eat into profits. And a scandal at one outlet can damage the whole brand.
