Franchisee

What is a 'Franchisee'

A franchisee is 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.

BREAKING DOWN '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. Franchiser

    A party in a franchising enterprise that ultimately owns the ...
  2. Franchise

    A type of license that a party (franchisee) acquires to allow ...
  3. Franchise disclosure document

    A Franchise Disclosure Document (FDD) is a legal document presented ...
  4. Franchise Factor

    The measurement of the impact on a company's price-earnings (P/E) ...
  5. Franchise P/E

    The expected value of new business opportunities available to ...
  6. Franchised Monopoly

    Monopoly status given by the government to a company. A franchised ...
Related Articles
  1. Entrepreneurship

    What is a Franchise?

    In a franchise, the franchisee acquires access to the proprietary knowledge, processes and trademarks of an established business – the franchisor.
  2. Fundamental Analysis

    Do Fast Food Franchises Mean Fast Returns?

    We look at what it takes to own a fast food franchise: the entry costs, profit potentials, challenges, and sustainability.
  3. Entrepreneurship

    Is Buying A Franchise Wise?

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

    4. Financing Freefall

    Buying a franchise may not be all that it's cracked up to be. Find out why.
  5. Entrepreneurship

    2. Outrageous Royalty Fees

    Buying a franchise may not be all that it's cracked up to be. Find out why.
  6. Entrepreneurship

    1. Frightening Franchise Fees

    Buying a franchise may not be all that it's cracked up to be. Find out why.
  7. Entrepreneurship

    Is Buying A Franchise Wise?

    Before you dive headfirst into buying a franchise, you might want to stop and think.
  8. Entrepreneurship

    3. Bloated Raw Material Costs

    Buying a franchise may not be all that it's cracked up to be. Find out why.
  9. Entrepreneurship

    Top 7 Franchise Dangers

    Buying a franchise may not be all that it's cracked up to be. Find out why.
  10. Entrepreneurship

    Learn Before You Sign

    Buying a franchise may not be all that it's cracked up to be. Find out why.
RELATED FAQS
  1. What are some examples of different types of business models in major industries?

    Learn what types of business models are currently being used in the marketplace as well as examples of models that work for ... Read Answer >>
  2. Why did Howard Schultz decide to keep Starbucks a chain rather than allow franchising?

    Read about why billionaire Howard Schultz chose to keep Starbucks a chain rather than franchising and how he led the chain ... Read Answer >>
  3. Why is brand equity considered an intangible asset?

    Brand equity is an intangible asset because the value of the brand is not a physical asset and is instead determined by consumer ... Read Answer >>
  4. How does brand image and marketing affect market share?

    Building a positive brand image is a must for companies that want an edge over the competition. Learn how marketing and branding ... Read Answer >>
  5. What are some of the benefits of positive brand equity?

    Learn how having positive brand equity enables companies to make a higher margin on sales and spend less money on marketing ... Read Answer >>
  6. Why do limit orders cost more than market orders?

    Learn the difference between a market order and a limit order, and why a trader placing a limit order pays higher fees than ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center