What is Franchising?

"Franchising is the practice of using another firm's successful business and brand to operate a similar business. For the owner of the business model or better known as Franchisor, franchising is an alternative to expand the business through third party investment." quote from Franchise Malaysia Organisation.

Franchising is a concept of doing a kind of business by getting the franchise licenses. Franchising allows the franchisor for the rapid expansion of their business system by the licensing. Franchising can also be describe as the relationship between the franchisor (owner of the business),  and the franchisees (who applied licences to distribute the franchisor's goods or service, and to use the business name for a fixed period of time). 

The contract between the franchisor and the franchisees are about to pay certain fees as ongoing royalty for the right to conduct business under the name of the franchisor. The franchisor will provides the franchisee a licensed privilege to do business, plus assistance in organizing training, merchandising and management of the business ongoing.

This chart shows the relations of the franchisor that named as the Franchise Headquarters while the franchisees named as the Franchise Operators and distribute the goods and services to the customers under licenses giving and using the same brand name. This would also meant that the franchisees' sales would also affect the franchisor in some way.