Multi-Unit Franchise Experts

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Franchising Definition

Searching for a better career often means starting a business of your own. Franchising is an opportunity for dissatisfied career changers to make a significant change — but to take advantage, it’s essential that you first understand the definition of franchising.

The International Franchise Professionals Group (IFPG) is a membership-based franchise consulting network with more than 1,300 franchisors, franchise consultants and vendor members. Together, our franchise broker group members guide aspiring business owners through the process of identifying and investing in franchise businesses. Our purpose-driven mission is based on integrity, ethics and collaboration.

What exactly is franchising? What are the components and advantages of franchising? How do you determine if franchising is the right choice for your business?

This article will provide an in-depth answer to these questions, and provide some tips to help you make an informed decision on whether to pursue a franchise or another business opportunity.

What Is Franchising?

At the most basic level, franchising is a unique type of business structure that allows a franchisor to license a business system to an individual or group, usually under an established brand name. The franchisor then grants the franchisee the authority to use the franchisor’s trademarked products and services, business processes, signatures, and/or Proprietary Information for a limited time.

Key Components to a Franchise

For a business to qualify as a franchise, it must contain certain elements, which include:

  • The franchisor must grant the franchisee the right to operate its business under its trademarked name.
  • The franchisee must pay the franchisor a franchise fee or an ongoing royalty on their gross sales.
  • The franchisee must adhere to the business standards and operational processes of the franchisor.
    • The franchisor must provide the franchisee with training, instructions, and support.
    • The franchisor must provide access to its unique products or services.
    • The franchisee must be independent operators.
    • The franchise must have a predetermined term of agreement.

Advantages of Franchising

Franchising has a number of advantages, including:

  • With a franchise, you benefit from the franchisor’s well-known, recognized brand.
  • Franchisors offer more comprehensive training and support that helps franchisees succeed.
  • The franchisor’s business model and processes are already proven.
  • Franchisees gain access to the franchisor’s existing best practices, supplier networks, and existing customer base.
  • Franchisees are typically provided with more capital than those starting a new business.

Choosing the Right Franchise

It’s important to thoroughly research a franchise opportunity before investing in a franchise. Here are a few tips to consider when exploring franchise opportunities:

  • Understand the terms and conditions of the franchise agreement. Make sure you know what kind of obligations you have to the franchisor and what the franchisor’s ongoing obligations are to you.
  • Obtain a complete list of all required start-up costs, including any franchise fees, legal costs, and professional fees.
  • Understand the demand for the franchise’s products or services in the marketplace. Consider the location of your franchise and the demographic the business will serve.
  • Determine what type of on-site and remote support the franchisor provides. Ensure that the franchisor is available to answer your questions and provide assistance.
  • Investigate the franchisor’s history. Review its annual report to get an idea of the franchisor’s financial health.

Franchising is an attractive opportunity for career changers looking to make a meaningful transition. By thoroughly researching franchising opportunities, you can make an informed decision on whether franchising is right for your business.


Franchising Definition,

Franchise Opportunity,

Career Change

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