Franchising

A type of contractual arrangement between a franchiser (a manufacturer, a wholesaler, or a service sponsor) and a franchisee, which allows the franchisee to conduct a given form of business under an established name and according to a given pattern of business. It is an indirect market entry technique in the form of licensing that gives a distributor or retailer the exclusive right to sell a product or service in a specified area. This technique is used by organizations that want to rapidly establish a market presence with limited capital risk.