A franchise is a business model in which an individual or group (the franchisee) is granted the right to operate using the branding, products, and operational methods of an established company (the franchisor) in exchange for initial fees and ongoing royalties.
For example, an entrepreneur purchases a franchise from a national sandwich chain for an initial franchise fee of $45,000, then pays 6% of weekly gross sales as ongoing royalties and 2% for national advertising, in exchange for using the brand, menu, and proven operating system.
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