business franchise

What is a franchise?

What is a franchise? Franchising is a method of distributing goods and services and expanding business through a licensing relationship. It involves relationships of interdependent businesses that allow people to share their methods of doing business, brand identification and proven distribution and marketing system.

This is a marketing tool used by companies in order to expand the market share rapidly with less expense. Businesses use it in order to attract new customers and keep existing ones. It creates a great image to the current and future customers about the products and services that the company can offer to them.

Since it deals with business, its main concern is also to give and provide for the needs of their potential customers. It aims to develop a good relationship among business owners, dominate markets and keep customers rather than competitors.

What is a franchise and what are its three basic types?

The brand licensing or trademark—giving the right to the licensees in using the parent company’s brand or trademark in union with the operation of their own business such as beverages and sport franchises.

The Distributorships—it grants the right of selling the parent company’s product/s such as auto dealerships (Ford, Mercedes, Toyota, Gm, etc.)

The business format franchises—this type of franchise is what most people are familiar with like Meineke, Subways, Circle K, etc. It offers the licenses to their franchisees in order to use its business techniques and sell its good and services.

Knowing more about what is a franchise includes realizing its advantages and disadvantages.


  • If you work under a well-known brand or business that has a big name, it can also lead to a big success. There will be an increased security in your enterprise. You can save energy and time in raising the awareness to the public about your firm or business. The customers will definitely patronize your product because they have high expectations toward the brand you are working with.

  • You will have an ongoing help and support from the franchisor. They will not leave you running their brand without their guidance and giving you pieces of advice. They can help you in maintain your customers and assist in the stock control systems. They will also offer you help for your finances in getting your business off the ground and that is why knowing what is a franchise is beneficial.


  • You will be doing things their way and they would train you how to run your business. You cannot do the things you want for your business. You might feel frustrated if the company’s policy has hampered some of your plans for your outlet.

In order to become successful in franchising, you should know what a franchise is and understand its legal implications on your relationship with all the franchisees and franchisor. Working with the company managers and other franchisees to market the brand would be the one of the best things to keep your customers.

Knowing what is a franchise will help you in making up your decisions whether you’ll work with a franchisor or you would work on your business alone.

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