Franchising Theory

Franchising Theory explains how businesses expand by allowing others (franchisees) to operate under their brand, using their proven methods and products. The franchisee pays fees or royalties in return for the right to run a location using the franchisor’s system. This approach leverages the franchisee’s local knowledge and investment while maintaining consistent quality and brand standards across locations. The theory highlights how franchising minimizes risks for the franchisor and accelerates growth, while providing franchisees with a tested business model and brand recognition, creating a mutually beneficial partnership.