What is the definition of a business franchise?
In simple terms, a business franchise is the way a company is able to distribute services or products through independent, third-party operators. The independent operator conducts their business by using the products, methods and name developed by the original company owner.SignificanceThe person who sells the business entity to other individuals is called a franchisor. The individual who buys that right is called the franchisee. Both parties have an agreement on how the business will be operated.FunctionThe State of Wisconsin Department of Financial Institutions explains that the informal term used to describe a franchise is a “business opportunity.” A business opportunity is classified as a franchise when it has three elements: a marketing plan, a trademark association and a franchise fee.ConsiderationsThere are three reasons companies begin to franchise, according to Entrepreneur Magazine. These reasons include lack of money, people and time.BenefitsMany companies start to franchise
