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.

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.

  1. Trademark

    A recognizable insignia, phrase or other symbol that denotes ...
  2. Franchise

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

    A process, tool, system or similar item that is the property ...
  4. Franchiser

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

    The value premium that a company realizes from a product with ...
  6. Efficiency

    A level of performance that describes a process that uses the ...
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