With a franchise, a company licenses its processes, intellectual property (e.g., trademarks), trade secrets and proprietary knowledge to an entrepreneur for a one-time fee and ongoing annual royalties.
An entrepreneur who buys a franchise is called a franchisee. The business that originally developed the products, services and proprietary knowledge being licensed is called the franchisor.
Franchising is a popular way to start a business and is prominent in the food industry. It gives an entrepreneur access to a franchise brand, marketing and ready-made operational model.