Franchiser

DEFINITION of 'Franchiser'

A party in a franchising enterprise that ultimately owns the rights, trademarks and proprietary knowledge of the specific business entity. This owner (franchiser) grants the right to operate a branch of the business under the names, brands and all associated aspects of the business to another party (the franchisee) in exchange for an annual fee and a portion of the branch's profits.

BREAKING DOWN 'Franchiser'

Becoming a franchiser is a good method for a business with an established brand to potentially expand across different markets and passively earn a good amount of revenues. However, franchisers must be very diligent in assessing potential franchisees and monitoring the quality and performance of existing franchises. Discrepancies of service quality or bad press will not only affect the financial performance of the franchise in question, but will also negatively affect the public's outlook about the entire brand in general.