What is Franchising

Franchising is a method of marketing through which successful business owners can expand the retail distribution of their goods and services by contracting with independent third parties. These third parties, known as franchisees, agree to operate the retail sales or services outlets featuring the franchisers original trademark goods or services and implementing marketing methods at their capital cost. In exchange for the opportunity to share in the net proceeds from the sale of trademarked goods and services, the franchisee pays an initial fee and ongoing royalties to the franchiser.

A franchise operation may be granted for either an individual license or in exceptional circumstances the award of a master franchise license, which confers the right to operate a network of franchises throughout a region or country.

32% of sales worldwide are achieved through the use of franchises and this figure will rise to 50% within 10 years, with clothing leading the way within retail sales.