Franchise Glossary
Franchisor
What is Franchisor in franchising?
The company that licenses its brand, systems, and intellectual property to franchisees in exchange for fees and royalties. The franchisor sets operating standards, provides training and support, manages the national brand, and is responsible for the strength of the system overall. Not all franchisors are equal in their support quality.
What is a franchisor?
The company that owns the brand, the trademarks, and the operating system, and licenses the right to use them to franchisees. The franchisor recruits and approves buyers, provides training and support, sets brand standards, and collects the initial fee and ongoing royalties. It does not own the individual locations its franchisees run.
What is the difference between a franchisor and a franchisee?
The franchisor owns the brand and licenses it. The franchisee buys that licence and operates a location under it. Money flows from franchisee to franchisor as an initial fee and then royalties; standards, training, and systems flow the other way. One brand has a single franchisor and many franchisees.
How does a company become a franchisor?
By proving the model works in company-owned locations first, then building the legal and operational apparatus to license it: a Franchise Disclosure Document prepared by a franchise attorney, registration in the states that require it, an operations manual, and a training programme. Doing it before the model is proven is how brands end up with franchisees who cannot succeed.