A franchisee is a party that runs a purchased franchise for a specific location. The franchisee typically pays an up-front fee to a franchisor to begin a franchise arrangement, as well as a percentage of its gross sales as an ongoing royalty fee. The franchisee must also do business under the franchisor's trademarked name, and cannot sell the products or services of other businesses that compete with the franchisor. Despite these costs and restrictions, a franchise arrangement can work well for a franchisee, which gains access to a proven business model, as well as the ongoing support of the franchisor. This arrangement works especially well for individuals who do not have a great deal of experience in starting up or running a business.

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