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  • Writer's pictureCrystal Lizama, CFE

What is a franchisor?

A franchisor is a company that grants a license to an individual or entity, known as a franchisee, to use the franchisor's trademarks, business model, and other intellectual property to operate a business. In return for this license, the franchisee typically pays the franchisor a franchise fee, as well as ongoing royalties based on the franchisee's sales.

Franchisors typically provide a range of support and resources to franchisees, including training, marketing and advertising, operational support, and access to the franchisor's established brand and customer base. This support is designed to help franchisees quickly and successfully launch and grow their businesses, leveraging the proven success of the franchisor's business model and brand.

Franchisors benefit from the franchise model by expanding their brand and customer base without incurring the costs and risks associated with opening and operating new locations themselves. Franchisees, on the other hand, benefit from the support and resources provided by the franchisor, as well as the established brand and customer base, to quickly and successfully launch their own business.

In order to become a franchisor, a company typically needs to have a proven business model and a strong and established brand. The franchisor must also develop and maintain a franchise agreement and provide the necessary support and resources to franchisees to help them succeed. Franchisors are subject to certain regulations and requirements, including the disclosure of detailed information to potential franchisees through a franchise disclosure document (FDD).

Franchisors play a vital role in the franchise industry, providing the support and resources needed for franchisees to succeed and grow their businesses. By leveraging their proven business model and established brand, franchisors can expand their reach and capitalize on the success of their business.

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