Send AllBusiness a Confidential E-Mail
The simplest way to define a franchise is to reference the Federal Trade Commission’s rule.
There are just three elements:
First, the franchisee must pay at least $500 to the franchisor within six months of starting the business.
Second, the franchisee uses the franchisor’s trademarks or service marks when conducting the business.
And third, the franchisor must exercise signficant control over the operation of the business. (In other words, if the franchisor provides training for running the business and also obligates the franchisee contractually to certain standards, then there is significant control.)