Franchise Industry Lingo: Franchisee vs. Franchisor

By Beth Caron

Are you researching the franchised business industry but are confused about some of the industry lingo? Don’t worry, you’re not alone. We’re here to help! Today, let’s talk about two very commonly used words in the franchising industry: franchisee and franchisor.

Franchisee

According to Dictionary.com, the word “franchisee” means: a person or company to whom a franchise is granted.
Let’s simplify this for a second. A franchisee is a business owner in a franchised company. Essentially, franchisees are independent business owners that purchase the rights to open a store under the name of a franchisor (like Great Clips). The franchisee must follow certain brand rules and guidelines put in place by the franchisor.

The benefit to being a franchisee instead of an independent small business owner is that a franchisee is joining an established company that already has a customer base, marketing and training tools, operational systems, and a recognizable brand name.

Franchisor

According to Dictionary.com, the word “franchisor” means: a person or company that grants a franchise.
The franchisor (like Great Clips, McDonalds, etc.) owns the overall rights and trademarks of the company and allows its franchisees to use these rights and trademarks to do business. The franchisor can offer support, best practices, preferred vendor partners and more.

Hopefully the relationship between franchisee and franchisor is more than just the official definition, though. Ideally, there is open communication between them, an ability to learn and willingness to grow the system as the franchisee and franchisor work together. This important dynamic is really what makes or breaks the experience of being in a franchise system.

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