A franchisee is an independent business owner who operates a third-party retail outlet called a franchise. In doing so, the franchisee has purchased the right to use an existing businesss trademarks, associated brands, and proprietary knowledge to market and sell the same brand and uphold the same standards as the first business. The franchisor is the person or corporation that owns the trade-marks and business model. The franchisor licenses the use of the trade-mark and business model to the franchisee, usually in exchange for an upfront payment and ongoing royalty payments.

Here are some key takeaways about franchisees:

• A franchisee is a business owner who is licensed to operate a branded outlet of a retail chain.
• The franchisee pays a fee to the franchisor for the right to sell its established products and use its trademarks and proprietary knowledge.
• The franchisee receives guidance and operational and marketing support from the franchisor.
• The franchisee is required to market and sell the same brand and uphold the same standards as the parent company.
• A franchise is merely a temporary business investment involving renting or leasing an opportunity, not the purchase of a business for the purpose of ownership.
• Franchising is rarely an equal partnership, especially in the typical arrangement where the franchisee is an individual, unincorporated partnership, or small privately-held corporation, as this will ensure the franchisor has substantial legal and/or economic advantages over the franchisee.