“Franchising is a method of business expansion whereby a business owner allows someone to market products or services under their name and trademark and in strict adherence to a system he/she prescribes. In return, the franchisee, as that person (or organization) is called, pays a fee and, usually, an ongoing royalty. Moreover, the franchisee pays all of the costs of getting into his or her own business.
There are three basic elements to being a franchise.
1. The Name – You allow someone the use of your name or trademark.
2. The System – You require them to operate their business, using your prescribed system.
3. Payment of a Fee – In return for the use of the name and system of operation, they pay you a fee or royalty.
By having these three elements items in place makes your business a franchise, and you are then required to follow the federal guidelines of having a Uniform Franchise Offering Circular.”
Read more in this Fresh Inc. article.