Franchising
Franchising is an arrangement in which a franchisor permits a franchisee to operate using its brand, business format or other specified rights under agreed conditions. The franchisee commonly pays initial or continuing fees and follows requirements intended to protect the brand and operating model. The arrangement can support expansion while sharing investment and operational responsibilities, but creates risks around quality, control, dependence and the allocation of costs and rewards.
Worked example
A restaurant operator permits a local business to use its brand and operating system in return for fees. The local operator funds and manages the outlet within the agreed standards, while the franchisor monitors brand and service requirements.
Common mistake
A franchisee is not automatically an employee or a wholly owned subsidiary. Check the contractual rights and responsibilities rather than assuming ownership from shared branding.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBL | Direct | September 2026–June 2027 |