Franchise

A franchise is a legal agreement under which a franchisee gains access to the proprietary processes and trademark name of the franchisor, typically in exchange for the payment of a periodic royalty fee. A franchise is a lower-risk way for someone to start a successful business, since the underlying business model has already been established. However, the startup and ongoing royalty charges can be significant, and the franchisee may also have to fund the franchise with a substantial amount of capital. Also, a franchisee can lose a franchise by violating the terms of the agreement.