A franchise, from a financial and business standpoint, is a business method where an individual (the franchisee) acquires a license that allows them to acquire the proprietary knowledge of a business they want to operate (the franchisor). The franchisee is then allowed to open a branch of the business in the name of the business and sell the product or service that the business sells.
The franchisee pays the franchisor start-up costs and annual licensing fees in order to be allowed to operate.
The advantage of starting a franchise for a business owner is that they are able to start up quickly and have the proven brand name and trademark of the franchise behind them.
Examples of popular franchises are Subway, McDonald's, and H&R Block, among many others.
The franchise for Subway usually costs between $84,300 and $258,300.
