Franchisee definition
/What is a Franchisee?
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.
Advantages for a Franchisee
Despite these costs and restrictions, a franchise arrangement can work well for a franchisee, for the following reasons:
Access to a proven model. The franchisee gains access to a proven business model.
Access to franchisor. The franchisee has access to the ongoing support of the franchisor. This is especially critical during the early days of a franchise location, when you are in most need of assistance.
Good for beginners. A franchising arrangement works especially well for individuals who do not have a great deal of experience in starting up or running a business.
Profitability. A franchise can be especially profitable when a number of locations are franchised, so that a franchisee can benefit from the profits generated by each location.