How does a franchise work?

[alexie]

I want to start a business. How does a franchise work, and what are the basic steps to get started?

 

[robertwilliam]

A franchise is a business arrangement where a company (franchisor) lets someone (franchisee) run a business using its brand, products and processes. In exchange for these fees or royalties, the franchisee operates under the franchisor's brand. This arrangement allows individuals to open a business with proven support, training and customer base.

 

[alexmetro]

Basically you pay a company for the right to run a branch of their business using their name, systems, and support, then share a portion of your revenue with them. You get a proven model to work with, but you also have to play by their rules pretty strictly.