Explain the term ‘franchise’. - Leaving Cert Business - Question A - 2007

A franchise is an arrangement where a franchisor grants the rights to a franchisee to operate their business model, using the franchisor's brand and products. The franchisee typically pays an initial fee and a percentage of their sales to the franchisor annually.

This agreement allows the franchisee to benefit from the established reputation and resources of the franchisor, which may help in attracting customers and achieving success more quickly than starting an independent business. Examples of well-known franchises include McDonald's, Supermac's, and The Body Shop. The franchise system allows the franchisee to operate under a proven business concept, thus minimizing some of the risks associated with starting a new venture.