Franchisee

AAA

DEFINITION of 'Franchisee'

The party in a franchising agreement that is purchasing the right to use a business's trademarks, associated brands and other proprietary knowledge in order to open a branch. In addition to paying an annual franchising fee to the underlying company, the franchisee must also pay a portion of its profits to the franchisor.

INVESTOPEDIA EXPLAINS 'Franchisee'

One of the benefits of being a franchisee is that the franchisor provides all the information that is needed for running the business (such as, training and suppliers). Furthermore, a franchisee is also usually given an exclusive area, where no other franchises belong to the same underlying business can set up shop in order to prevent internal competition.

RELATED TERMS
  1. Proprietary Technology

    A process, tool, system or similar item that is the property ...
  2. Franchise

    A type of license that a party (franchisee) acquires to allow ...
  3. Franchiser

    A party in a franchising enterprise that ultimately owns the ...
  4. Brand Equity

    The value premium that a company realizes from a product with ...
  5. Trademark

    A symbol, word, phrase, logo, or combination of these that legally ...
  6. Donation-based Crowd Funding

    Donation-based crowdfunding is a way to source money for a project ...
Related Articles
  1. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  2. Entrepreneurship

    Getting To Know Business Models

    Learning how to assess business models helps investors identify companies that are the best investments.
  3. Entrepreneurship

    Is Buying A Franchise Wise?

    If you like being your own boss, this is not the job for you.
  4. Personal Finance

    Share The Wealth With Franchises

    Skip the first step and build off of someone else's successful business model.
  5. Investing

    Crowdfunding: Wide Opening For Tech Investors

    Crowdfunding has dramatically changed investing and opened the door for the public to get in on all types of exciting startups, including tech firms.
  6. Entrepreneurship

    Taboola: How "Content You May Like" Makes Money

    Taboola's tagline, “content you may like,” conveys a lot about its business philosophy.
  7. Entrepreneurship

    Emerging Startup Cities Of 2015

    While Silicon Valley and New York have been the birthplace of several well-known startups, other U.S. cities are making names for themselves as tech hubs.
  8. Entrepreneurship

    The Importance of Excel in Business

    Microsoft Excel is an indispensable tool for any business.
  9. Professionals

    Ready For The Entrepreneurial Leap?

    There are key traits and motivations that characterize an entrepreneur; these aren't necessarily genetic, but can be acquired over time.
  10. Entrepreneurship

    10 Hottest Startups In 2015

    Check out these 10 hot startup companies that will rock the world in 2015.

You May Also Like

Hot Definitions
  1. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  2. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  3. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  4. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  6. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
Trading Center