Franchising is a contractual relationship between independent business owners. While a franchisee will likely work in the franchise, they are not employees of the franchisor.

It is a business arrangement where one party (the franchisor) grants another party (the franchisee) permission and the right to operate a business using its established brand, systems, and processes for a set period of time to try and make a profit. This permission and right allows the franchisee to leverage the reputation and recognition of the franchisor’s brand, business systems and proven solutions, and allows the franchisee to benefit from established trust and loyalty.

Franchisees in turn contribute to the capital base for franchisors to build their business and brand on a scale that might otherwise not be possible. A franchise model allows the franchisor to share business risks with franchisees willing to make the investment.

There are over 1,300 different franchise systems in Australia, and it is a way of operating a business that can be used in almost any industry. Expectations of franchisors and franchisees varies depending on the nature of the franchise relationship.