Franchising is the practice of granting the rights of one company's business model, including brand, products and processes, to another company. The company granting the rights is called afranchisor. The franchisor grants the independent operator the right to distribute its products, techniques, and trademarks for a percentage of gross monthly sales and a royalty fee. Various tangible and intangible products and services, such as national or international advertising, training, and other support services are typically made available by the franchisor.
The term franchise is used to describe business systems which may or may not fall into the legal definition of franchising. For example, a vending machine operator may receive a franchise for a particular kind of vending machine, including a trademark and a royalty, but no method of doing business. This is called "product franchising" or "trade name franchising".
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